An Italian-flagged cruise ship with 288 people on board caught fire on Friday while sailing through the Mediterranean's Ionian Sea, said the Greek coastguard.

According to the coastguard, the cruise ship was carrying 237 passengers and 51 crew members, reports Xinhua news agency.

One person got respiratory problems and was transferred to a local hospital, reported the Greek national broadcaster ERT.

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Police said three tug boats and three patrol boats have been sent to help passengers.

All passengers aboard the ship, Euroferry Olympia, heading to Italy from Greece, have been rescued, according to the Greek radio station Skai.

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They were being transported to the nearby Greek island of Corfu, said the coastguard.

The cause of the fire is under investigation.