Transport ministry's spokesman Xu Chengguang told reporters that so far 97 bodies have been retrieved from the ship that had 456 people onboard when it capsized on Monday.
Footage shown by state television showed that one side of the capsized 2,200-tonne Eastern Star ship was lifted above the water with heavy cranes.
A large part of the four-storey ship was found heavily damaged.
The search and rescue team started to lift the capsized ship at 8 PM yesterday, according to the Transport Ministry.
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The ship has been lifted by cranes capable of lifting the whole vessel and set it upright.
Experts in diving, recovery, relief and ship design from across the country are on the spot to provide support.
The cruise ship carrying mainly elderly tourists was on a 11-day trip along the Yangtze River when it was immediately overturned by a freak tornado on Monday night in Jianli in central China's Hubei Province.
Over 200 divers, who searched the overturned ship since Tuesday and managed to rescue two people, finally halted their operations at 8 PM last night after through checks conducted by scanners to detect life yielded no results.
A number of passengers were also believed to have drowned or washed away by river current.
Meanwhile, after vocal protests from the relatives of those missing in the tragedy, the government brought over 1,200 people here with special transport arrangements and housed them in nearby hotels.