The grisly discovery came a day after a preliminary Chinese government probe concluded there were no survivors on the vessel that overturned on May 16.

The Lu Peng Yuan Yu 028 had on board 17 Chinese, 17 Indonesians and five Filipinos and was within Australia's vast search-and-rescue region, 5,000 kilometres (2,700 nautical miles) west of Perth.

The Philippine foreign ministry said the boat was located on May 18 about 1,000 kilometres south of Sri Lanka but that rescue efforts were hindered by bad weather.

The Sri Lankan navy said its divers had recovered two bodies and spotted 12 more on Tuesday, releasing photos showing the upturned red hull of the vessel and bodies being hauled out of the water.

"Due to decomposition and the potential health hazards posed by operating in contaminated waters with limited protective gear, it was determined that retrieving those bodies would be exceedingly dangerous," the navy said in a statement.

It said the locations of the 12 bodies inside the boat were mapped and handed to Chinese authorities. The nationalities of the located bodies were not immediately known.

The Sri Lankan navy statement came a day after a preliminary probe by the Chinese transport ministry concluded that all those on board had died.

Australia had sent three aeroplanes and four ships to help in the international search-and-rescue efforts.

Rescuers had trawled an area of around 64,000 square kilometres (18,700 square nautical miles), and "did not find any sign of survivors", according to the Chinese transport ministry.

The fishing vessel's distress beacon was first detected last week as Cyclone Fabian drove waves as high as seven metres (23 feet) and winds as strong as 120 kilometres per hour (75 miles per hour) through the area.

Rough weather held back rescue efforts, with the Joint Rescue Coordination Centre (JRCC) in Canberra warning of "challenging" survival conditions.

The vessel was owned by the Penglai Jinglu Fishery Company, one of China's major state-run fishing firms.

It was authorised to fish for neon flying squid and Pacific saury, according to the North Pacific Fisheries Commission.

It left Cape Town in South Africa on May 5 for Busan in South Korea, according to the Marine Traffic tracking website, which last located the vessel on May 10 southeast of Reunion, a tiny French island in the Indian Ocean.

Penglai Jinglu Fishery also runs squid and tuna fishing operations in international waters, including the Indian Ocean and seas surrounding Latin America.