Greek and Italian rescue helicopters and vessels struggled to reach the stricken ferry, with nearby merchant ships lining up to form a wall against the raging gusts.
The fire broke out on the car deck of the Italian-flagged Norman Atlantic, traveling from the Greek port of Patras to Ancona, Italy with 423 passengers and 55 crew members on board. No one has been reported injured, and the ship was not in immediate danger of sinking, authorities said.
"The fire is still burning," Greek passenger Sofoklis Styliaras told private Mega television. "On the lower deck, where the lifeboats are, our shoes were starting to melt from the heat... There's nowhere else for us to go. It's impossible to walk on the lower deck because of the heat."
Merchant Marine spokesman Nikos Lagadianos said a life boat carrying about 150 passengers had been lowered into the water, but that only 42 had been moved to a nearby cargo ship so far. He said 234 passengers and 34 crew are Greek and the rest are of various unspecified nationalities.
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Merchant Marine Minister Miltiadis Varvitsiotis said the coastguard was in constant contact with Italian authorities and the Greek armed forces. "We are committed to rescuing everyone on the ship, and are trying to ensure that nobody will be left unaided," he said.
Greek authorities said they had sent five helicopters and a military transport plane to the area to assist in the operation, with the ship reported to be 42 nautical miles (48 miles, 78 kilometers) northwest of Corfu.
Eight merchant ships were next to the Norman Atlantic as part of the rescue effort, and being used to form a barrier against the high winds of up to 88 kilometers per hour.