A ferry carrying around 700 passengers sinks after colliding with a cargo ship in the Philippines.

The coast guard said the MV Thomas Aquinas listed and began sinking after hitting the cargo vessel and the captain ordered the ship abandoned.

Coast guard officer Joy Villegas said the collision occurred on Friday evening close to the shore near the central city of Cebu.

Two rescue vessels have been dispatched and other nearby boats were helping to pull passengers from the water.

There has been no official confirmation of casualties but passenger Jerwin Agudong told radio station DZBB that people were trapped on the ferry and he had seen bodies in the water.

He said "It seems some were not able to get out. I pity the children. We saw dead bodies on the side, and some being rescued".