More than 120 people have been rescued after a boat capsized north of Christmas Island, a week after an asylum-seeker boat sank in the area.

Australian officials said merchant vessels had gathered 123 people from the water, after the boat sent a distress call early today.

Prime Minister Julia Gillard said between 123 and 133 people were believed to have been on board.

Two Australian navy vessels were on their way to the site.

An image of the vessel, taken before it sank by one of the merchant vessels at the scene and released by the Australian Maritime Safety Authority, showed people crowded on the deck of the boat.