The navy said at least 550 people had been pulled to safety but added that the rescue operation was still underway and that the death toll could rise.
The navy's Bettica patrol boat spotted "a boat in precarious conditions off the coast of Libya with numerous migrants aboard," it said in a statement.
"Shortly afterwards the boat overturned due to overcrowding. The Bettica, which had arrived nearby, threw life-rafts and jackets" to the migrants in the water, while another navy ship in the area sent a helicopter and rescue boats.
The latest arrivals bring the number of people rescued and transferred to Italy since the start of the year to nearly 40,000 following the rescue of more than 6,000 since Monday, according to figures collated by the UN's refugee agency (UNHCR) and the Coastguard.
The overwhelming majority of those arriving in Italy so far this year have been from sub-Saharan Africa.
The UNHCR, aid organisations and the Italian government say there is no sign yet of Middle Eastern refugees switching to the Libyan route to Europe following moves to restrict access from Turkey via the Greek islands.