The men were travelling home to Iona after attending a dinner and dance on the neighbouring island of Mull when their dinghy overturned in the early hours in blustery conditions. The alarm was raised by a fifth man who managed to swim ashore.
The emergency servicessearched for the men using lifeboats and two helicopters, one of which was scrambled from the Royal Naval Air Station at Gannet. The underwater unit of Strathclyde Police was also assisting.
The body of one of the five men was discovered washed ashore and several items ofmen's clothing were discovered. "We have been searching for them all day but there is no sign. By this stage you have to say hopes are fading," said a spokesman for HM Coastguard last night.
The alarm was raised at 4.15am yesterday after the survivor, Gordon Grant, the son of a prominent local businessman, scrambled ashore and woke up a farmer. Mr Grant was yesterday being treated for hypothermia at a hospital in Tobermory, Mull.
The man whose body was recovered was named last night as Robert Hay, 23, of Iona. The men who remain missing were named as Logie MacFadyen, 24, of Laggan Dorain; Alisdair Dougal, 19, of Iona, and David Kilpatrick, 23, of Iona.
They were returning from a dance at the Argyll Arms Hotel at Bunessan and had launched their 14ft dinghy from the tiny port of Fionnphort to return across the Sound of Iona, a distance of about half a mile.
Islanders yesterday spent the day helping the rescue services. The community, famous for its role in the spread of Christianity, usually numbers around 200.
"Everybody on Iona will be devastated, stunned," said Duncan MacLeod, proprietor of the Argyll Arms. "We know the lads reasonably well. One of the lads wasn't drinking at all, and some of the others were going out fishing today. I certainly would not say they were drunk when they left. The people on Iona will be very, very affected. For young lads like that to be lost from a community of that size is tragic."
Gordon Grant, the sole survivor, was reported last night to be the boyfriend of Catherine Smith, daughter of the late Labour leader John Smith. Mr Smith, whose family has strong links with Iona, is buried on the island.
Mr Grant was said to have only a slight facial injury, but to be very badly shaken.
He works in the family business, and in summer months takes tourists on boat trips to the nearby island of Staffa, location of "Fingal's Cave".
As the search was stood down last night until dawn, gusting winds and torrential rain battered the half-mile wide Sound of Iona where the dinghy went down. Across the black stretch of water, only a few scattered lights could be seen on Iona.