Rescue group Migrant Offshore Aid Station (MOAS) said it has recovered 34 bodies, mostly toddlers when 200 people without life jackets fell into the Mediterranean Sea.
The Italian Coast Guard called in more ships to help with the rescue, saying about 1,700 migrants were packed into about 15 vessels.
The migrants were fleeing towards Europe from poverty and war across Africa and the Middle East.
The ill-fated boat probably tipped because of a combination of weather conditions and the fact the migrants suddenly crowded to one side, sending just under half of the 500 on board into the water.
British and Spanish navy ships, aid group Doctors Without Borders (MSF), three merchant ships and a tug boat joined MOAS and the Italian coast guard and navy to carry out the rescues.