Holidaymakers from Britain, France, Italy and Germany were forced to flee the 1,500-cabin Costa Concordia in lifeboats when it hit a reef less than two hours after leaving port.
Some leapt overboard and swam to shore as the ship started to sink into the waters near the island of Giglio, off the Tuscan coast.
Francesco Paolillo, the coastguard spokesman, said that at least three bodies were retrieved from the sea and at least three more were feared dead.
Local officials are also reporting that 69 people are still unaccounted for.
By this morning, the ship was lying virtually flat off Giglio's coast, its starboard side submerged in the water.
Pregnant women and young children were among the 3,200 passengers and 1,000 crew on board.
Passengers' dinner on Friday night was interrupted by a loud boom at around 8pm and a voice over the loud-speaker system initially claimed that the ship was suffering an electrical failure, before ordering everyone on-board to don life-jackets.
"It was just like something out of the Titanic," one woman said. "You could tell straight away that the ship had hit something and no way was it an electrical fault.
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