Twenty-five people have been killed and dozens injured in a collision between a ferry and another boat south of Hong Kong during a festival.

A vessel, packed with 124 revellers, hired by the Hong Kong Electric company for staff and family, started sinking.

Television footage showed the boat half submerged with the bow pointing straight up.

More than 100 people have been rescued and dozens taken to hospital as the search continues for those still missing.

"Some of them are suffering hypothermia and four had to be resuscitated," a paramedic at the Queen Mary Hospital said.

The collision occurred near Lamma Island, off the southwestern coast of Hong Kong, near one of the city's busiest shipping lanes.
A survivor is taken onto shore after being rescued from the sea following a collision between tow boats in Hong Kong. A survivor is brought ashore by rescuers

Hong Kong chief Leung Chun-ying said the government had mobilised all its resources to respond.

"All our emergency rescue teams are concentrated there ... we can see that bit by bit, the people in the water are being rescued," he said.

"We will do all we can to find those who are still missing."

Survivors were taken by boat to Hong Kong island, where a fleet of ambulances whisked them to several hospitals.

Rescue teams in boats and helicopters spent the night scouring the sea around the site of the accident for signs of survivors, while dive teams entered the sunken boat.

The hired boat was headed to Victoria Harbour to watch a fireworks display on a long holiday weekend to celebrate China's National Day and mid-autumn festival.

Hong Kong Electric's director of operations S.S. Yuen said: "This is a very happy holiday and it turned out to be such a tragic incident."

The government initially said a ferry collided with a tugboat.

However, local news reports said the collision was between the hired vessel and a larger boat operated by the Hong Kong and Kowloon Ferry company on a regularly scheduled service.

Police are investigating the cause of the collision.