Indonesian search and rescue team carry a victim body of a ferry sinking at Tigaras port in Toba Lake, North Sumatra. Picture: Binsar Bakkara/AP

Jakarta - Indonesian officials on Wednesday raised the number of people believed to be missing after a ferry capsized in North Sumatra province's Toba Lake to 166.

The ferry sank on Monday afternoon after it encountered bad weather and 2-metre-high waves.

The wooden ferry did not have a manifest, so officials were relying on reports from families with missing relatives to calculate the number of people believed to be on board the boat, which was reportedly operating illegally

The head of the local disaster agency, Mahler Tamba, told dpa that a search and rescue party found an unidentified body on the lake on Wednesday morning, raising the number of confirmed deaths to two. Eighteen people were rescued earlier.

Mahler said the 166 people listed missing were reported by families in Tigaras in Simalungun district where the boat was headed and in Simanindo from where it departed.

"We will cross-check and verify the names accordingly," Tamba told dpa.

Lake Toba is the largest lake in Indonesia and sits about 900 metres above sea level. Its cool climate and beautiful scenery make it a popular tourist destination, especially during the current Eid holiday season.