It had been feared that all 26 Greek and Filipino crew of the 26,000-ton Maltese-registered Christinaki had been lost when she foundered in mountainous seas and hurricane winds.
The helicopters were flying from Bantry Bay, Co Kerry, where they stopped to refuel. The life-raft was seen by the Austrian-registered cargo ship Tirol, which had been directed to the area by an RAF Nimrod search aircraft from Kinloss in north-east Scotland. Falmouth coastguard said the Tirol was unable to rescue the people in the raft because 'conditions out there are horrendous'.
More lights had been seen in the area, amid a Force 10 storm and 35ft (10 metre) seas.
The Christinaki put out a distress signal at 4pm yesterday. Last radio contact was 30 minutes later. The coastguard said late last night: 'We are assuming the Christinaki has sunk. We are still optimistic that survivors managed to get into life-rafts and if they have done that there is a good chance they will survive.'
A Ministry of Defence spokesman said the Clyde-built Christinaki, carrying scrap metal from Liverpool to Veracruz in Mexico, had been taking on 'vast quantities of water' through hatches believed to have been damaged in the storm.
Blizzards, heavy rain and winds up to 100mph brought death and disruption to many parts of Britain. Snow blocked roads and flights and ferry crossings were cancelled.
A climber was killed after being swept 500 feet (170 metres) down a gully by an avalanche in Glencoe. William Murphy, 25, from Mallow, Co Cork, and a companion who survived, had decided their climb was unsafe, and were descending when the avalanche struck.
A hill walker, Ian Ross, 71, from Cambusbarron, central Scotland, died after being blown down a steep embankment by a gust of wind in the Ochil Hills, a mile north of Alva, near Stirling.
With storm force 11 winds in the Irish Sea, all ferry sailings between Holyhead and Dun Laoghaire were suspended. Crossings to and from the Isle of Wight were also affected.
Thousands of homes across the Peak District were without electricity and 20,000 Ulster homes also suffered an earlier power loss.
A 60-year-old man died after falling off a lean-to at his house in Monmouth, Gwent, while trying to retrieve a blown-out window.
Forecast, page 2Reuse content