People survey the damage near a shopping mall following earthquakes and tsunami in Palu, Central Sulawesi, Indonesia. Picture: Tatan Syuflana/AP

Palu, Indonesia - Rescue teams in Indonesia struggled on Sunday to reach communities feared devastated by a major earthquake and tsunami on Sulawesi island, with a toll of more than 400 killed expected to rise sharply as contact is restored with remote areas.

Dozens of people were reported to be trapped in the rubble of a hotel and a mall in the city of Palu, which was hit by waves as high as six metres (20 feet) following the 7.5 magnitude earthquake on Friday.

A young woman was pulled alive from the rubble of the Roa Roa Hotel, the news website Detik.com reported. Hotel owner Ko Jefry told Metro TV on Saturday that up to 60 people were believed trapped. Hundreds of people gathered at the mall searching for loved ones.

"We've got information from people that their relatives are still inside, so we’re focusing on that, especially to find survivors," a rescuer identified as Yusuf, working at the ruins of the mall, told Metro TV.

With confirmed deaths only from Palu, authorities are bracing for much worse as reports filter in from outlying areas, in particular, Donggala, a region of 300,000 people north of Palu and closer to the epicentre of the quake.

Vice President Jusuf Kalla said the toll could rise into the thousands.

People survey the damage following earthquakes and a tsunami in Palu, Central Sulawesi, Indonesia. Picture: Tatan Syuflana/AP

A disaster official said the tsunami travelled across the open sea at speeds of 800km/h before striking the shore and casualties could have been caused along a 300 km (200 miles) stretch of coast, north and south of Palu.

The fishing town of Donggala has been extensively damaged, with houses swept into the sea and bodies trapped in debris, according to a Metro TV reporter on the scene.

"We have heard nothing from Donggala and this is extremely worrying. There are more than 300,000 people living there," the Red Cross said in a statement.

"This is already a tragedy, but it could get much worse."

Indonesia is all too familiar with deadly earthquakes and tsunamis. In 2004, a quake off Sumatra island triggered a tsunami across the Indian Ocean, killing 226,000 people in 13 countries, including more than 120,000 in Indonesia.

Questions are sure to be asked why warning systems set up around the country after that disaster appear to have failed on Friday.

The meteorological and geophysics agency BMKG issued a tsunami warning after the Friday quake but lifted it 34 minutes later, drawing widespread criticism it had withdrawn it too quickly. But officials said they estimated the waves had hit while the warning was in force.

Hundreds of people had gathered for a festival on Palu's beach when the wall of water smashed onshore at dusk on Friday, sweeping many people to their deaths.

Video footage showed trees, buildings and a communications tower being swept through a rural landscape by a landslide caused by liquification of the soil, according to BNPB's Nugroho.

In other footage on social media, a man on the upper floor of a building could be heard shouting warnings of the approaching tsunami to people on the street below moments before the wave crashed ashore. Reuters was not able to authenticate the footage.

The Head of the National Disaster Management Agency (BNPB), Willem Rampangilei, told reporters in Sulawesi late on Saturday rescuers were struggling in their hunt for more victims as the death toll in Palu had reached 420.

"We are having difficulty deploying heavy equipment to find victims under the rubble of buildings because many of the roads leading to Palu city are damaged," he was quoted by the Kompas newspaper as saying.

About 10,000 displaced people were scattered at 50 different places in Palu, he said.

Amateur video footage aired by TV stations showed waves crashing into houses along Palu's shoreline, scattering shipping containers and flooding into a mosque.

Dozens of injured people were being treated in tents set up in the open.

Photos confirmed by authorities showed bodies lined up on a street on Saturday, some in bags and some with their faces covered by clothes.

President Joko Widodo was scheduled to visit evacuation centres on Sunday.

Australian Prime Minister Scott Morrison said Indonesia had not asked for help but he had contacted President Widodo overnight to offer support and deep sympathies.

“It is horrifying ... If he needs our help, he’ll have it,” he told ABC TV’s Insiders programme. .

More than half of the 560 inmates in Palu's prison escaped after its walls collapsed during the quake, according to state news agency Antara, while more than 100 inmates escaped from a prison in Donggala.

The military has started sending in aircraft with aid from Jakarta and other cities, authorities said.

Palu's airport was damaged in the quake, but was reopened for limited commercial flights on Sunday, authorities said.

Indonesia sits on the Pacific Ring of Fire and is regularly hit by earthquakes.

In August, a series of major quakes killed more than 500 people On the tourist island of Lombok, hundreds of kilometres southwest of Sulawesi.