Rescuers and emergency services are at the scene of the accident which happened near Hungary’s Parliament building and the Elisabeth Bridge in the centre of the city. A source said that the boat made contact with another tourist boat in strong winds that caused it to sink, although this has yet to be officially confirmed. Some passengers have been safely rescued from the water.
There were 34 people were onboard the vessel, including two crew, when the accident took place according to the MTI news agency.
Local media reported many of the passengers on board were South Korean tourists.
The vessel, said to be called the Mermaid, sank following the collission.
Photos taken at the scene show emergency crews desperately searching for passengers in the water.
One witness said on social media: “Tragedy. Serious boat accident on the Danube. People are missing.”
All shipping through the Hungarian capital has been halted by police.
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A statement from the Hungarian Interior Ministry said one person was successfully resuscitated after being taken from the water.
Budapest has been lashed by powerful thunderstorms and rain over the past couple of days.
This has caused some flooding along parts of the Danube, which runs through the Hungarian capital.
The Guardian journalist Shaun Walker tweeted a picture of emergency services at the scene.
He commented: “Boat down in Danube in Budapest tonight. Filthy weather.
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“CEO of Hungarian ambulance service just told me: 35-40 on board, 8 rescued, “several” were unconscious.
“Resuscitation ongoing. Search continues. Some people found miles downriver due to current.”
The Mermaid has a capacity of up to 60 people, and is used for sightseeing tours of the city.
The company’s website states: “It can be an excellent venue for smaller receptions and family events.
“Spacious terraces and panoramic decking along the body allow great views of Budapest’s skyline.”