Eighty-six people were plucked from the stricken rubber dinghy on Saturday and eight bodies - all women - were recovered. But the boat had been carrying 150 migrants, said survivors, and many of the dead vanished beneath the waves.
"Among them there were many children who are believed to have drowned at sea," Doctors Without Borders said on Twitter.
The Italian coastguard said the migrants had been spotted by a plane patrolling the seas on behalf of a European anti-smuggling operation. Rescuers believe their dinghy deflated following a puncture.
Such boats are regularly crammed with migrants by people smugglers operating from Libya and were never built to withstand crossing the Mediterranean Sea.
The majority of the migrants are Africans fleeing war and poverty back home. Italy is working with various groups and authorities in Libya to slow the flow of newcomers.
