It is the second deadly boat accident in a fortnight in Bangladesh, which is heavily reliant on ferries for transport but has a poor safety record.

“This morning the bodies were found in the boat after it was raised and dragged to the shore,” police inspector Abdul Muktadir said after a salvage vessel raised the sunken ferry from the water.

“The death toll is now 69,” he said.

Government administrator Rashida Ferdous said most of the estimated 150 people on board had been accounted for. Those who were on the upper deck were able to swim away or were rescued by other boats.

“Almost all those died were helplessly trapped inside the lower deck after the boat sank,” Ferdous said.

Rescuers worked through the night to recover bodies after the collision on the Padma river around 70 kilometres west of the capital Dhaka.

Hundreds of people including relatives of the missing thronged the shore early today as rescuers searched inside the salvaged vessel and brought out the bodies.

Ahad Ali cried loudly as Red Crescent volunteers unzipped one of the white body bags to reveal his brother, 23-year-old Mohammad Sharif.

“My brother was a brilliant student and a textile worker. He called me on Sunday morning that he was heading to village after hearing our father has suffered a brain stroke,” Ali wept, taking his brother’s head in his hand.

“He was on the upper deck, but fate took him to the lower deck for lunch. He was a good swimmer but could not escape the gushing water trapping him inside," Ali said. 

Nearby, Kazi Anisur Rahman was scouring the bodies as he searched for a missing friend.

“He is not among them. I spent the last 20 hours at the terminal looking at all the bodies,” said an exhausted Rahman. “He did not know how to swim. So we fear the worst."

The government has ordered an investigation into the accident.

Shipping Minister Shahjahan Khan said the ferry had been “in a race” with the cargo vessel. Survivors said the MV Mostofa was overcrowded with passengers, leaving them scrambling to find their loved ones when the tragedy struck.

“I was holding my mother’s hand when the cargo boat hit our ferry from behind,” an 18-year-old who gave his name as Al Amin said at the terminal.

“Within two minutes the ferry was sunk. Before I realised I was washed away to the middle of the river.

“I swam and a ferry rescued me. But I don’t know what happened to my mum.”

Three people have been arrested, including the driver of the cargo vessel. The captain of the sunken vessel is still missing.

Boat accidents are common in Bangladesh, which is criss-crossed by more than 230 rivers.

Boats are the main form of travel in remote rural areas, especially in the south and northeast. Experts blame poorly maintained vessels, flaws in design and overcrowding for most of the tragedies.

Ferries do not normally keep passenger lists, making it difficult to establish how many are missing after an accident.

This month, at least five people were killed when an overloaded ferry carrying some 200 passengers capsized in an estuary in the south of the country.

And about 50 people were killed in August last year when a crowded ferry sank in rough weather.

Some 150 people were killed in March 2012 after an overcrowded ferry carrying about 200 passengers sank after being hit by an oil barge in the dead of night. Most of Bangladesh's boats don't meet safety regulations.