Only 14 people have been confirmed alive out of the 456 -- mostly tourists aged over 60 -- on board when the "Eastern Star" rapidly sunk on the Yangtze river in a storm on Monday.
The death toll jumped by over 200 after rescuers hoisted the battered ship out of the Yangtze river on Friday and began recovering bodies trapped inside.
The official Xinhua news agency put the number of dead at 396 as of noon local time on Saturday.
That would make it China's worst shipping disaster since 1948, when up to 4000 on board the SS Kiangya were killed when it sunk near the city of Shanghai.
As images showed the blue and white vessel's caved-in roof, a state-broadcaster CCTV said rescuers' torches were visible inside the ship overnight.
Online images showed workers from surgical suits handling body bags in the vessel's dark cabins, while others slept on a nearby floating platform, exhausted by their grim work.
At a nearby funeral parlour, AFP saw men also in white suits driving a convoy of about 20 mini-vans adapted to carry coffins towards the disaster site.
A total of 46 people remain missing, but a government spokesperson said on Thursday that no new survivors are expected to be found.
Rescuers used massive cranes to lift the ship at the site of the disaster in Hubei province's Jianli county on Friday.
Reports citing witnesses said the 76.5 metre long (250 feet) and 2,200 tonne ship overturned in under a minute, and weather officials said a freak tornado hit the area at the time.
The vessel was cited for safety infractions two years ago, according to a notice by the Nanjing Maritime Bureau, but no further details have been given about the state of the ship.
Investigators will probe the ship's structure for flaws, CCTV said, after the ruling Communist party's all-powerful Politburo Standing Committee vowed to leave "no doubts remaining," about the disaster.
Information about the sinking and media access to the site have been tightly controlled, and online criticism of the search operation quickly deleted.
Relatives of those on board clashed with police earlier this week, and an angry woman berated officials at a press conference in Jianli on Friday.
A group of relatives from Nanjing, the city in the eastern province of Jiangsu where the boat began its journey, argued with officials from their home town at a meeting in Jianli on Saturday morning, AFP learned.
A city official refused to make clear commitments to families about them receiving the bodies, showing "impatience," a woman at the meeting surnamed Zhang said.
He responded to questions by telling relatives they should do his job if they were not satisfied, she added.
Family members who emerged from the meeting looked visibly upset as they hugged each other and walked away arm in arm, shaking their heads.
Other relatives who had arrived in Jianli were growing impatient at the lack of information and the lack of access to the disaster zone.
"We have come all this way, but all we are doing is waiting," said Jin Weifeng, who travelled from Shanghai to seek news of his mother-in-law Wang Shuisheng.
A petition posted by family members on social media service WeChat called for "key state leaders" to apologise, an investigation, compensation and the "death sentence" for the ship's captain, one of the few survivors of the disaster, who is in police custody.
Local reports said other ships in the vicinity had dropped anchor after a warning of heavy storms, but the Eastern Star continued on.
Among the rescue effort were more than 3,400 soldiers and 1,700 paramilitary police and 149 vessels, Xinhua said.
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