OFF SIBUYAN ISLAND, Philippines (AFP) - - Philippine rescue divers said they found many bodies Tuesday inside the ferry that sank with more than 850 people on board, confirming the worst fears of desperate relatives.

Anxious and angry family members had been clinging to hope their loved ones might still be found alive inside the doomed Princess of the Stars, which capsized and sank Saturday when it got caught in the path of a typhoon.

But with blame flying over how the 24,000-tonne ferry was allowed to set sail with the storm looming, shaken rescue divers said they had discovered the worst when they finally worked their way into the submerged ship Tuesday.

"We saw 15 bodies trapped in one section of the ship,"said coast guard diver Lieutenant Commander Inocencio Rosario.

"The bodies are floating inside," he said, adding that most of them were not wearing life jackets.

"Two men were on the bridge, wearing the Sulpicio Lines uniform. One was holding the radio. He must have been an officer," Rosario said.

Passage through the ship was hampered by fallen furniture, equipment and broken glass, he said, adding that they did not have enough underwater flashlights or batteries to dive for long.

The vessel is sitting upside down on a coral reef off San Fernando, Sibuyan Island, with most of the bottom of its hull protruding from the water.

At least three bodies were removed from the ship and placed in cadaver bags aboard a coast guard vessel, said an AFP reporter at the scene.

Philippine civil defence chief Anthony Golez said 57 people, some of whom made it onto lifeboats, survived the sinking -- one of the worst maritime disasters in the country's history.

But many passengers reportedly had little time to react when the vessel, trapped when Typhoon Fengshen suddenly changed path, began tilting and then quickly capsized off the central island of Sibuyan.

Sulpicio Lines, however, said it had recorded 59 survivors and 15 dead after names were checked against the ferry's manifest.

Radio dzMM reported the Coast Guard was checking reports 16 passengers had been rescued by a fishing vessel, off Sibuyan Island. But this report could not be confirmed late Tuesday.

The Coast Guard said their figures showed 43 found alive and 12 dead but admitted the figures had not been updated since Tuesday morning.

The ferry reportedly developed engine trouble while trying to make it to safety.

Vice-President Noli de Castro, who inspected the recovery operations on Tuesday, said they still hoped that survivors might be found in an air pocket inside the ship.

But he warned that rescue efforts would have to proceed slowly to avoid fuel leaking. Oil spill booms were seen being set up around the sunken vessel.

A US navy supply ship and a maritime patrol plane have joined the search, and the local military said the Americans had deployed an unmanned aerial vehicle to hunt for survivors.

The tragedy was the fourth for Sulpicio Lines since 1987, when the Dona Paz collided with a tanker and sank, killing more than 4,000 people.

The government slapped an immediate ban on Sulpicio's vessels from leaving port on Monday, though the company said it was still selling tickets because it had not been formally notified of the move.

Sulpicio is one of the largest ferry operators in the Philippines, where people are heavily dependent on ferries to get around the country's more than 7,000 islands.

"We are at a loss as to what really happened," vice president Sally Buaron said.

She said the captain, Florenio Marino, sent a distress call moments before giving the order to abandon ship.

"As long as there's small hope that there is an indication that people are still in the waters, we will continue to search," Golez said.

Another ship, the transport vessel Lake Paoay, went down in the same area during the storm on Saturday, leaving three dead and 17 missing.

Officials were trying to make sure they do not mix the survivors or casualties from the different vessels when accounting for those on the Princess of the Stars.

President Gloria Arroyo on Monday ordered the coast guard to review sailing guidelines, especially those relating to typhoons.