COX'S BAZAR - More than 60 Rohingya refugees are feared dead after a boat carrying them from Myanmar capsized, leaving distraught relatives to hold burials on Friday in squalid Bangladesh camps which the Red Cross says are tipping into a health crisis.

Half a million Rohingya have crushed into camps in Bangladesh in just over a month, fleeing a Myanmar army campaign and communal violence that the UN describes as "ethnic cleansing".

They have poured over on foot or crossed the Naf river which bisects the two countries in overcrowded boats.

One of them capsized in rough waters on Thursday agonisingly close to the shore, survivors said, as the boat's Bangladeshi captain lost control of the vessel after pushing far out to sea for two days to avoid patrols.

The bodies of 23 people have been retrieved so far but the death toll is expected to surge to around 60, with many of the dead likely to be young children too weak to swim through the heavy waves.

"Forty are missing and presumed drowned," International Organization for Migration spokesman Joel Millman told reporters in Geneva.

Survivor Abdus Salam told AFP the captain steered the boat into trouble within striking distance of the Bangladeshi coastline. "He didn't see a rock underneath the water and we hit it."

In distressing scenes, refugees on Friday held funerals for loved ones - among them children - who had hoped to find sanctuary from violence that has cut through their homeland in Rakhine state.

A woman carried a small white bundle to a grave for a Muslim burial, while male relatives wept at a school building where bodies had been laid out. "My wife and two boys survived, but I lost my three daughters," Shona Miah, 32, told AFP.

Those who have made it to Bangladesh have been squeezed into a vast makeshift refugee settlement that has become one of the world's biggest in a matter of weeks.

Medical staff say the camps are in imminent danger of disease outbreak, as relief groups are overwhelmed by the numbers of hungry and traumatised Rohingya.

A dire shortage of clean water, toilets and sanitation is spreading disease and pushing the camps to the precipice of a health disaster, the Red Cross warned.

"Our mobile clinics are treating more people, especially children, who are very sick from diarrhoeal diseases which are a direct result of the terrible sanitation conditions," said Mozharul Huq, secretary general of the Bangladesh Red Crescent Society. In some of the camps hundreds of refugees are sharing a single toilet, said Martin Faller, of International Federation of Red Cross and Red Crescent Societies (IFRC).

"The conditions for an outbreak of disease are all present - we have to act now and we have to act at scale," he added. UN chief Antonio Guterres exhorted Myanmar's leaders to end the "nightmare" faced by Rohingya refugees fleeing an army campaign, after at least 19 people drowned with scores more feared dead when a boat carrying Rohingya families capsized off Bangladesh.

The billowing humanitarian crisis prompted the UN Security Council to hold its first meeting on Myanmar in eight years, though the member countries failed to arrive at a joint resolution.

The US slammed the army for trying "to cleanse the country of an ethnic minority", while Beijing and Moscow offered support to Myanmar authorities who have vehemently rebuffed allegations that ethnic cleansing is underway.

Speaking to the 15-member council, Guterres urged Myanmar to halt military operations and open humanitarian access to the conflict-wracked western region. "The situation has spiralled into the world's fastest developing refugee emergency, a humanitarian and human rights nightmare," he said, while calling for those displaced from the conflict to be allowed to return home.

The UN decided Friday to extend an investigation into abuses committed in Myanmar, especially in Rakhine state, where violence has forced hundreds of thousands of Rohingya Muslims to flee.

The UN Human Rights Council adopted a resolution tabled by the European Union calling for the international fact-finding mission to be given another six months. Several countries distanced themselves from the resolution, including China, but none demanded a vote in the 47-member council, and the measure was adopted by consensus.

The council set up the mission in March to investigate possible violations across Myanmar, with a particular focus on alleged crimes against Rohingya in Rakhine state.

The UNHCR says nearly one in five of arrivals is suffering from "acute malnutrition", while aid groups have pledged to deliver 900,000 doses of cholera vaccine to Bangldesh within a fortnight.

Worsening conditions are compelling Rohingya to try to move out of the wedge of land Bangladesh has set aside for the new arrivals.

But Bangladesh police have stopped more than 20,000 Rohingya from going inland, a senior official said Friday, after authorities imposed travel restrictions on the refugees fearing they will move further into the country.

Though Bangladesh is hosting the refugees, it has urged Myanmar to allow a safe return for the Rohingya.

Myanmar says it is ready to begin repatriating refugees to a camp in the Maungdaw district of northern Rakhine. But rights groups say the criteria for return is convoluted, discriminatory and carefully crafted to take back as few of the minority as possible.

Many Rohingya do not possess the requisite documents to be allowed back or are unwilling to return to villages that have been burnt to the ground.

The Muslim minority are loathed in Myanmar, where they are denied citizenship and are instead branded "Bengalis" - or illegal migrants who do not belong in the Buddhist-majority country.

Attacks on police posts in Rakhine by Rohingya militants on August 25 set the crisis in motion.

The kickback by Myanmar's army killed hundreds and left scores of Rohingya villages in ashes.

Rohingya who fled say they survived slaughter by soldiers and ethnic Rakhine Buddhists who were once their neighbours.

Ethnic Rakhine and Hindus have also been displaced inside Rakhine, accusing Rohingya militants of atrocities.

Rohingya are still on the move and UN chief Antonio Guterres has warned that the "systemic violence" could spill further south to the central part of Rakhine, threatening a further 250,000 Muslims with displacement.

On Thursday the UN Security Council failed to agree on a joint resolution after China and Russia supported Myanmar's right to defend itself.

International pressure has so far done little to rein in Myanmar army operations.

Access to the violence-stricken part of Rakhine is tightly controlled by the military, preventing international aid groups reaching desperate Rohingya left behind or independent reporting on the crisis.