A photographer who was able to board the stricken wooden vessel said more than 1,000 migrants had been crammed aboard.
They were among at least 28 migrants who died in the area on Tuesday, while some 4,655 people were rescued.
The total number rescued over the past two days is more than 10,000, while the death toll is at least 50.
Smugglers have taken advantage of calm weather to push more boats out to sea.
Aris Messinis, a photographer for the French AFP news agency, said many of the dead aboard one particular boat had suffocated.
He said: "It was a wooden vessel and there were about 1,000 people on three levels. I counted 22 bodies and there are still others in the hold."
Mr Messinis's graphic images showed the bodies of dead young men and women, piled on top of one another on the deck of a dinghy and in the cramped hold of a wooden boat.
On Monday, 6,055 migrants were rescued - one of the highest numbers in a single day - and 22 found dead,  Italian and Libyan officials said. One Italian ship rescued about 725 migrants from a single rubber boat, the coastguard said - just one of 20 rescue operations that day.
Relatively calm weather is contributing to a surge in the number of people attempting to make the crossing before the cold weather sets in.
The surge takes the number of migrants who have arrived in Italy this year to about 142,000 and the death toll to about 3,100, according to the International Organisation for Migration.
The majority come from African countries, including Nigeria, Eritrea, Guinea, Gambia, Sudan, Ivory Coast and Somalia.
European law says migrants must stay in the country where they first enter the EU. With fewer migrants able to travel into Europe via Greece and the Balkan route, and France, Switzerland and Austria effectively closing their borders, Italy is struggling to deal with the growing numbers landing on its shores.
Monday marked three years to the day since 366 migrants died when an overcrowded boat sank off the Italian coast, in a disaster that first drew widespread attention to the plight of those attempting to reach Europe by sea.

The NHS is standing firm and says it has no responsibility to provide the treatment, known as Prep.
It says the onus should fall on local authorities instead.
Charities have called the decision "shameful", and warned that lives would suffer as a result.
Prep (pre-exposure prophylaxis) is a daily pill that can considerably lower a person's chances of catching HIV.
If taken correctly, it is almost entirely effective in preventing HIV.
NHS England has promised Â£2m in funding to treat about 500 people with Prep over the next two years.
But after considering representations from stakeholders, it still does not believe it should be the body responsible for offering the drug.
A statement on the NHS England website said: "'As set out in the Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) Regulations 2013, local authorities are the responsible commissioner for HIV prevention services."
Ian Green, chief executive of the Terrence Higgins Trust, said: "Today is a shameful day for HIV prevention.
"This country used to lead the way in the fight against the HIV epidemic, but today, our national health service has washed its hands of one of the most stunning breakthroughs we've seen - a pill which, if taken correctly, is almost 100% effective in preventing HIV.
"A pill which is already available in America, Canada, France, Kenya and soon to be Australia.
"How did it come to this? It defies belief that, after 18 months of false hope, delays and u-turns in the battle to see Prep made available on the NHS to people at high risk of HIV, today we are in a worse position than when we started."
He said repercussions for those at high risk of HIV infection could be dire.
"It's not right that people who know themselves to be at high risk of HIV have to buy Prep themselves from the internet at considerable personal expense. Currently, only those who can afford it are able to access this life-changing treatment."
The NHS in Wales, Scotland and Northern Ireland have not yet made a decision on Prep.
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More than 20 migrants are said to have suffocated in the hold of an overloaded boat off the Libyan coast.
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NHS England has reiterated it will not fund a "game-changer" drug treatment that can prevent HIV, angering HIV charities which had been campaigning to reverse the decision.