The ferry, the 6,325-ton Sewol, began to sink at about 8:55 a.m. off the coast of Jindo on its way to Jejudo Island from Incheon.
Of the 459 people on board, a woman identified as 22-year-old Park Ji-young, a staff worker for the ferry company, and Jung Cha-woong, a student at Danwon High School in Ansan, Gyeonggi Province, were confirmed dead.
As of 3:50 p.m., about 290 people remain unaccounted for.
The passengers included 324 students and 14 staff from Danwon High School who were traveling to Jejudo Island on a school trip.
The government immediately launched a central response center, with President Park Geun-hye ordering authorities to concentrate on rescue efforts.
“Efforts should be made to prevent even one casualty, and a thorough search (of the ship) must be carried out to ensure nobody is left behind,” Park was quoted as saying by Lee Gyeong-og, Second Vice Minister of Security and Public Administration.
The Minister of Security and Public Administration and the chief of the National Emergency Management Agency coordinated the rescue efforts from the scene.
In addition, U.S. Navy ship Bonhomme Richard joined the rescue efforts. The U.S. 7th Fleet also said that it will provide support as necessary.
Although the Security Ministry initially claimed that 368 people had been rescued as of 1:10 p.m., the figure was later revealed to have been a miscalculation.
“As the rescue operation is underway, the exact numbers cannot be compiled yet. The figure of 368 (rescued people) was a mistake,” Lee Gyeong-og said, in a special briefing at about 3:30 p.m.
He added that the number is likely larger than the figure of 166 the ministry had announced earlier in the day.
Although rescue workers arrived at the scene at 9:30 a.m., about half an hour after the emergency call from the Sewol, the search for survivors moved along slowly, hampered by strong currents.
The passengers began jumping into the sea following an onboard announcement that the ship was about to sink completely as rescue efforts were underway.
“A search was conducted within a 5-kilometer radius, but no recoveries were made. Considering the water temperature, depth and the time lapsed, anyone trapped inside is unlikely to have survived,” a rescue worker told a local news network.
The depth of the sea where the ship sank is reported to be over 45 meters, and the water temperature is reported to be about 12 degrees Celsius.
The cause of the accident has not been determined, but the passengers suggested that the ferry hit a reef just before 9 a.m. when the vessel jolted with a loud noise.
Rescued passengers also speculated that thick fog may have caused the accident, but the meteorological office said the area was clear with visibility of about 20 kilometers.
It is also speculated that the ferry may have altered course in order to make up for time lost due to the departure being delayed by weather conditions.
Chonghaejin Marine Co., the operator of the sunken ferry, apologized for the accident saying it will focus on rescue efforts.
A company official said the vessel did not deviate significantly from course, and that the company was making preparations to recover the ferry.
The company operates four vessels including the Sewol on three routes -- which set out from either Incheon or Yeosu -- as well as river taxis on the Han River.
This is the second accident involving a Chonghaejin Marine vessel to occur in three weeks.
On March 28, another Chonghaejin ferry hit a 7.93-ton fishing boat en route to Baengnyeong Island in the West Sea from Incheon. The 396-ton ferry was carrying about 140 passengers and there were no injuries reported.
No irregularities were found on the Sewol during a safety check conducted in February.
By Choi He-suk and Suh Ye-seul