Reuters AlertNet -- Jakarta: Indonesia's police chief on Thursday denied a media report that policemen pointed their guns at asylum seekers who wanted to get off an overcrowded boat bound for Australia that sank last week killing 350 people.

Australia's Sydney Morning Herald quoted survivors who said more than a dozen police protected people smugglers who organised the trip for the mostly Iraqi immigrants.

The U.N. refugee agency and the International Organisation for Migration (IOM) both cautioned that the accusations had not been proven, adding they had come from badly traumatised people.

"There was nothing like that," police chief General Bimantoro told reporters before attending a regular cabinet meeting when asked about the report, adding police were "not really convinced" about the testimonies from survivors of last Friday's tragedy.

The Herald quoted survivors who said many thought boarding the rotting Indonesian boat was too dangerous.

An Egyptian smuggler smashed one migrant over the head with the butt of a gun when he wanted to take his wife and two children off the boat, survivor Kareem Jabar said.

"When most of us saw the boat was too dangerous we wanted to get off and get our money back," the Herald quoted 25-year-old Jabar from Iraq as saying.

"Several police in smaller boats pointed their guns at us. The police were protecting the smugglers."

No survivors interviewed by Reuters earlier this week made accusations against the police.

Only 44 survived the tragedy, one of Indonesia's worst maritime disasters and a dark reminder of the plight of thousands of Middle Eastern and Afghan refugees who use the vast Indonesian archipelago as a springboard to try to reach Australia each year.

The boat left Sumatra island for Australia's remote Christmas Island, a popular landing target for asylum seekers. It sank off the coast of Indonesia's Java island.

National police spokesman Saleh Saaf told Reuters that a team had been set up to find out what really happened.

Defence Minister Matori Abdul Djalil told reporters tough action would be taken if any police involvement was found.

"This information will certainly be discussed and verified. If it did happen, there should be stern action against the officers who are involved in the matter," he said.

Head of the IOM's liaison office in Indonesia, Richard Danziger, urged caution over the allegations.

"We have to be very cautious as to what the survivors are saying and look at what they've just gone through," he said.

Raymond Hall, regional representative of the U.N. High Commissioner for Refugees (UNHCR), said that until now there had never been allegations of migrants being forced on to boats by police.

"There's been no suggestion people have been forced on to boats out of Indonesia. On the contrary, the suggestion has really been more that people have not been retained. People usually want to travel on," he said.

"Criticism of police and immigration so far has been that they have not been doing enough to stop people and have actually been facilitating the desire of the people themselves."

He said the UNHCR had been urging the government to tackle the refugee crisis.

"It's (also) in Indonesia's interests to have a full and transparent inquiry into exactly what happened with this boat," he said.

Among its myriad woes, Indonesia has its hands full with some one million people already internally displaced by separatist and communal fighting along the country's outer reaches.

Middle Eastern and Afghani immigrants usually reach Indonesia via Malaysia and wait for years to get on rickety fishing boats paying around $1,000 a head to people smuggling syndicates.

Underscoring the potential for further disaster, police in the West Timor town of Kupang have rounded up around 200 mostly Afghani asylum seekers whose boat ran aground at the weekend on the remote eastern Rote island.

Foreign Minister Hassan Wirajuda on Wednesday said Jakarta would hold a meeting next month with Australia and other Asian countries on the refugee crisis but gave no details on what the talks would seek to achieve.

Indonesia has no law which can directly punish the middlemen making huge profits from the trade.