"There are 93 victims, including three children and two pregnant women," said Interior Minister Angelino Alfano, who flew to the remote island of Lampedusa near where the tragedy happened.
Rescue divers later said they had identified at least 40 more bodies in and around the sunken wreck at a depth of around 40 metres, just a few hundred metres from the shore.
There were fears that the final toll could rise further to 300 or more people since rescuers said that only around 150 survivors had been plucked from the water over 12 hours after the disaster.
There were also poignant stories of survival like the young Eritrean woman thought dead and laid out with other corpses before medical personnel realised she was still breathing and revived her.
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"Seeing the bodies of the children was a tragedy. We have run out of coffins," said Pietro Bartolo, a doctor. "In many years of work here, I have never seen anything like this," he said.
Lampedusa is one of the main entry points into the European Union for asylum-seekers crossing from north Africa or the eastern Mediterranean.
Survivors said they were from Eritrea and Somalia and had left from the Libyan port of Misrata.
The migrants told rescuers they set fire to a blanket on the boat to attract the attention of coast guards after their vessel began taking on water and passing fishing boats ignored them.
The fire spread quickly, sowing panic on board which caused the boat to flip over and sink, as people jumped into the sea to save themselves.