ROME (AFP) - Survivors of the most deadly migrant shipwreck in years have described the horrifying moment traffickers capsized their boat and left them to drown, the International Organisation for Migration (IOM) said on Tuesday. "After they hit our boat, they waited to make sure that it had sunk completely before leaving. They were laughing," one survivor told IOM.

Fresh witness testimony confirmed around 500 people drowned after their boat sank off Malta on Wednesday, including up to 100 children who had been making the treacherous journey from Egypt to Italy, according to the Geneva-based organisation.

After three days at sea clinging to life buoys, a freighter picked up nine survivors. Two Palestinians were taken to Italy while the other seven, including a two year-old girl, were taken to hospital in Crete. One later died and the toddler remains in a critical condition.

The Palestinians, aged 27 and 33, told IOM their boat had been intentionally sunk by the people smugglers after the migrants refused to change to a smaller, less seaworthy vessel - a story corroborated by the survivors in Crete. "A violent argument ensued. The 10 smugglers, said to be Palestinian and Egyptian, began yelling," the IOM said, citing the latest testimony from Greece.

The enraged traffickers "rammed" the boat which "began to sink immediately, while the smugglers stayed in the area until they were certain that the migrant's vessel had sunk", it said.

Those who had managed to jump to safety into the smaller boat were "forced into the water" by their assailants.

"When the boat was first struck, one of the passengers killed himself in despair by hanging," one of the survivors said.

The Syrian, Palestinian, Egyptian and Sudanese migrants had set out from Damietta in Egypt on Sept 6.

Four bus loads of migrants were loaded onto the boat, which was between 15m and 18m long, until there were some 300 people crammed below deck and 200 on top - including up to 100 children, the IOM said based on the survivors' reports.

"The 300 people who were in the lower deck were trapped and drowned immediately. The survivors say they watched as those thrown in the water clung to each other trying to stay alive," it said.

The two Palestinian survivors, who have requested asylum in Italy, said they paid a "travel office" in Gaza US$2,000 (S$2,500) each for the trip, with the money coming from grants they had been given to rebuild their homes.