Italy's coastguard yesterday said it had narrowly averted a catastrophe after people smugglers set a cargo ship with 900 people on board on a collision course with the country's rocky southern shoreline.

In a tweet to Prime Minister Matteo Renzi, the coastguard revealed that the ship's engine had been locked on with the steering set on a direction that would have meant it would have crashed ashore somewhere in the Puglia region on the "heel" ofltaly.

The coastguard scrambled two helicopters overnight after realising that the ship, the Moldovan-registered Blue Sky M, was headed for disaster.

Six coastguard officers boarded the vessel and, after some frantic moments, were able to unlock the engines and bring the boat under control.

The migrants on board, mostly from Syria and including a heavily pregnant woman whose waters broke during the drama, were taken to the port of Gallipoli as an inquest began into how the alarming incident had occurred.

Greece's coastguard had on Tuesday afternoon received a distress call from someone on board the boat who reported that it was being navigated by heavily armed men.

A navy frigate, a helicopter and two patrol vessels were dispatched to intercept the boat off the island of Corfu.

But after what now appears to have been a very cursory check, the boat was allowed to continue towards Italy. A spokesman for Greek port police told AFP at the time that an inspection had revealed "no (mechanical) problems and nothing suspicious on the boat."

The drama came as Italy and Greece were coping with the aftermath of Sunday's Norman Atlantic ferry disaster, which has left at least 13 people dead and dozens more unaccounted for.

Italy's coastguard has vast experience in rescuing migrants from the often unseaworthy boats that people smugglers use to ferry people fleeing conflict or poverty in the Middle East, Africa and Asia to Europe's southern shores. More than 170,000 migrants have landed in Italy this year and hundreds have perished at sea while attempting to make the crossing.