"The sinking took place off the coast of the city of Khoms," some 100km from Tripoli, said Safa Msehli, spokesperson for the International Organisation of Migration in Libya.
About 145 migrants were rescued by the Libyan coastguard, and survivors had reported that about 150 people remained missing, she said.
General Ayoub Kacem, a spokesman for the Libyan navy, said that "134 migrants were rescued and a body recovered, while 115 other migrants are still missing".
"A wooden boat carrying around 250 people, including women and children, sank some five nautical miles from the coast, according to witness testimony from the migrants who survived," Mr Kacem said in a statement.
The charity Doctors Without Borders (MSF) said as many as 250 migrants were still missing.
The migrants had been apparently headed out to sea on three boats lashed together, MSF mission chief Julien Raickman said.
He said survivors had reported a total of almost 400 people on board.
Mr Kacem said most of the rescued migrants were from Ethiopia while others were Palestinians and Sudanese. The coastguard was waiting for authorities to provide accommodation for them.
The head of the UN refugee agency Filippo Grandi tweeted that it was "the worst Mediterranean tragedy of this year".
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