Investigators arrested captain Lee Joon-Seok and two of his crew early in the morning. All three have been criticised for abandoning hundreds of passengers trapped in the ferry, as they made their own escape.
Lee was charged with negligence and failing to secure the safety of passengers in violation of maritime law.
Thirty-three people have been confirmed dead in the disaster, but 269 are still missing -- most of them children on a high school holiday trip.
"Civilian divers spotted three bodies through a window," a senior coastguard officer said.
More From This Section
They attempted to break through the window but failed and had to surface without retrieving the bodies, he explained in a briefing to relatives of the missing.
The relatives, who have been sleeping in a gymnasium on Jindo island near the scene of the disaster, were shown video footage from one dive.
Even with a powerful underwater flashlight, visibility was measured in inches as the diver was seen groping his way blindly along the side of the ship with the help of a pre-attached rope.
"Instead of dispatching two divers at a time, we're going to send up to 10," said senior coastguard officer Choi Sang-Hwan.
Earlier today captain Lee and the two crew members were paraded before TV cameras at their arraignment, dressed in dark raincoats with their hoods pulled up and their heads bowed.
Questioned as to why passengers had been ordered not to move for more than 40 minutes after the ship first foundered, Lee insisted it was a safety measure.
"At the time a rescue ship had not arrived. There were also no fishing boats or other ships around to help," Lee said.