The UN refugee agency has described the incident as "one of the worst tragedies involving refugees and migrants" in the past year. More migrants have taken up the route from North Africa to Italy, according to Rome.
The Office of the UN High Commissioner for Refugees (UNHCR) said on Wednesday that "as many as 500 people may have lost their lives" when a large ship capsized in the Mediterranean Sea between Libya and Italy on April 16.
A UNHCR team on Tuesday met with 41 survivors, who were rescued by a merchant ship and transported to Kalamata in Greece, the UN agency said.
"The survivors told us that they had been part of a group of between 100 and 200 people who departed last week from a locality near Tobruk in Libya over a 30-meter-long boat," UNHCR said in a statement.
"After sailing for several hours, the smugglers in charge of the boat attempted to transfer the passengers to a larger ship carrying hundreds of people in terribly overcrowded conditions. At one point during the transfer, the larger boat capsized and sank," the agency added.
According to UNHCR, the survivors floated at sea for three days until being rescued; 37 of them were men, along with three women and a three-year-old child. The survivors were from Somalia, Ethiopia, Egypt and Sudan.
The agency's report comes amid fears that more migrants may attempt the perilous journey from Libya to Italy as warmer weather provides improved sailing conditions.
At the end of March, Italy's interior ministry reported a sharp increase in maritime rescue operations in the Mediterranean with more than 16,000 migrants saved during the first three months of 2016, up from 10,165 for the same period last year.
In 2015, over 150,000 arrived in Italy by sea, many fleeing conflict and economic deprivation in Africa, the Middle East and Asia, according to figures from the International Organization for Migration.
More than one million entered the EU the same year, with the majority entering the 28-nation bloc through Greece after crossing the Aegean Sea from Turkey.