A passenger boat caught fire in waters off the country's southern coastal city of Yeosu early Tuesday, but all people on board were rescued, the Coast Guard said.

The 4,000-ton ferry Seolbong, which departed from the port city of Busan late Monday for Jeju Island, was traveling along the south coast near Yeosu, some 455 kilometers south of Seoul, when it caught fire at 1:20 a.m., prompting the Coast Guard and the Navy to dispatch dozens of patrol ships to rescue a total of 128 passengers and crew members on board, according to officials.

Seven people who were slightly injured while being rescued have been taken to nearby hospitals for treatment, the officials added.

It was not immediately clear what started the fire, but a crewman told the Coast Guard that while on patrol he saw smoke suddenly wafting from below deck where the freight room is located.

An investigation into the exact cause is under way, according to the Coast Guard. (Yonhap News)