A coast guard spokesman said four ships were involved in the operation, with helicopters on their way.
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This marks the second time this week that migrants have had to be rescued in waters off the Greek coast.
“Migrant Report”, quoting the Libyan Red Crescent, said those found dead near Zwara included children.
With warmer weather and seas, smugglers have been packing migrants into unseaworthy boats by the tens of thousands, launching off from North Africa across the Mediterranean Sea to try to reach Europe.
Europe is now undergoing its worst migration crisis since World War II, with well over a million migrants entering the continent last year and similar projections for the year in progress.
The Greek coast guard says Saturday the unnamed ship is also carrying the body of a migrant who drowned in Friday’s shipwreck of a smuggling boat that sank in the southern Mediterranean Sea.
A Greece coastguard spokeswoman told AFP that a major rescue operation was underway, including four ships that were passing through the area, in clear but windy conditions about 75 nautical miles south of Crete.
Mr al Mosrati said a boat that capsized on Wednesday may have been the one carrying them.
The decomposing bodies of more than 100 migrants were washing up on beaches in Libya even as the Greek coastguard was rescuing more than 300 from a boat sinking off Crete, with hundreds of others still missing.
It was not immediately clear where the boat was from, where it was headed or who had been aboard.
The Italian coastguard issued a statement suggesting that coordination problems may have hampered rescue efforts. Others were on vessels bound for Egypt, Malta and Turkey, Greek state TV ERT said quoting the Crete coastguard.
More than 2,500 have died making the crossing this year.
The deal has led to a dramatic decrease in the number of people arriving on Greek islands from Turkey.
In the months since those border closures, the predominant route into Europe has shifted to the west, with more migrants attempting to enter from North Africa via Italy.
Following the March closure of the Balkan route passing through Greece, which was the main gateway to Europe in 2015-16, most migrants and refugees now depart from Libya, and to a smaller extent, Egypt.
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There has been a large fall in the number of people arriving in Greece from Turkey since the deal was done.
