Scores of people have died in recent months as waves of migrants from North Africa and Middle East conflict zones attempt to reach Europe.
A tugboat for Libyan oil platforms alerted authorities to the capsized boat and an Italian coast guard vessel - already transporting 318 migrants who had been rescued earlier - headed to the scene.
Some 121 people were rescued after the boat capsized but at least ten died.
Italy's coast guard has carried out seven rescue operations in less than 24 hours, saving 941 migrants in the Strait of Sicily, which separates the Italian island from the North African coast, it said in its statement on Wednesday.
Those rescued included more than 30 children and at least one pregnant woman, who was taken to hospital.
In January and February, 7,882 migrants arrived on the Italian coast, an increase of more than 43 percent compared to the same period last year, according to figures from Italy's interior ministry.