A fire broke out Friday on an Italian-flagged cruise ship sailing through the Mediterranean's Ionian Sea with 237 passengers and 51 crew on board, according to Greek port police.

All passengers from the Euroferry Olympia, which was heading to Italy from the Greek city of Igoumenitsa, are safe and on rescue boats, Secretary of State for the Merchant Navy Kostas Katsafados told Greek radio station Skai.

No casualties have been reported and police said three tug boats and three patrol boats were sent to help passengers.

"The captain of the Euroferry Olympia asked the passengers to leave the boat," police said.

They were being transported to the nearby Greek island of Corfu, said the Greek coastguard, which was leading the rescue operation.

The incident took place around 4:30 am (0130 GMT) off the northern coast of Corfu, between Greece and Albania, an official from the Greek coastguard's press office told AFP.

The cause of the fire is not yet known and an investigation has begun, the agency said.