Several reports say the vessel, a Moldovan cargo ship last tracked near the tiny island of Othonoi, northwest of Corfu, is carrying 700 passengers.
Greek state television has reported that 'illegal immigrants' are involved in the situation on the ship, while other news sources say all 700 passengers are 'undocumented migrants'.
A merchant marine ministry official said the distress call had come from one of the passengers on board the ship.
The vessel that sent out the distress call is a Moldovan cargo ship called Blue Sky, Corfu Port Authority President Spiros Andriotis told prothemanews.com
The cargo ship was headed to a Croatian port when it sent out the distress call, but tracking services show that the ship made a sharp turn, setting course towards Italy.
Greek authorities is sending a navy frigate and a helicopter to locate the cargo ship The incident comes two days after a Greek passenger ferry with more than 400 people on board caught fire in the same area, leading to a huge rescue operation by Italian and Greek coast guard and military officials.
At least 10 people died in that incident, while more than 400 were rescued.
Authorities are still searching for potential missing passengers from the Norman Atlantic ferry.
The Greek frigate Navarino, which is heading to locate the cargo ship, had been in the area assisting in the rescue operation for the Norman Atlantic.
