Spain's development ministry has said that a fire broke out on a ferry as it journeyed from Palma on the island of Majorca to Valencia in Spain.
Spanish media reported that around 156 people had to abandon ship around 17 miles from Palma de Mallorca
and were helped by emergency services.
The Spanish Ministry of Works said the captain did not initially want to evacuate the ferry but passengers and crew eventually left the burning boat in lifeboats.
The Sorrento was travelling to the coastal city of Valencia when the blaze began and quickly got out of control.
"The ferry operated by Trasmediterranea was travelling from Palma de Mallorca, the capital of the Balearic Islands, to the eastern Spanish port of Valencia when the blaze broke out in its garage for still unknown reasons," the company said in a statement.
The ferry, owned by Italian company Atlantica di Navigazione, sent out distress signals, the Ministry of Public Works said in a statement, and passengers were picked up in from lifeboats by several ships.
A port authority said 170 passengers were rescued but sea rescue services were unable to confirm the number.
The Red Cross had set up a first-aid point in Palma’s port in case any of the passengers needed medical attention after their ordeal.
Four crew members believed to be suffering from the effects of inhaling smoke from the blaze were taken off the Sorrento by helicopter. They were flown to a hospital in Palma, with one reported to be in a serious condition while the other three were said to be only slightly affected.