Thirty-eight bodies were freed from the hull, which divers had previously been unable to access. The official death toll now stands at 232.
Italian divers “unpacked a wall of people”, a navy officer said, adding that corpses were “so entwined one with the other” they were difficult to pull out.
There were 155 survivors of the accident, which happened about 1km (half a mile) offshore.
The operation to recover bodies from the hull was abandoned for the night, but will resume on Tuesday.
Tens of thousands of migrants attempt the perilous crossing from North Africa to Sicily and other Italian islands each year, and accidents are common – but last week’s shipwreck was among the deadliest on record.
The wreck is lying about 155ft below the surface, which means the recovery divers can only stay on the bottom for a short time.
All the bodies around the ship and on deck have been brought to the surface, police say, however dozens more are thought to remain inside the vessel.
“I’m sure that the most difficult part of the operation is starting now. Technically it will be much more challenging,” Coast Guard diver Rocco Pilon told Reuters news agency.
Navy Captain Paolo Trucco said that debris had to be removed from the passageways leading to the hull.
“Mattresses, blankets, stairs. Anything that would float. Imagine if you put a house in a centrifuge and you see what winds up in the air. That is what happened,” Paolo Trucco told the Associated Press.
“Some [bodies] we have found with their arms outstretched. We try not to notice this kind of thing too much, otherwise the task is too difficult,” said police diver Riccardo Nobile.
“We can see a woman’s hair floating out of a broken porthole. But we haven’t been able to get to her.”
The 66ft boat was carrying more than 500 people, mostly from Eritrea and Somalia.
The survivors are to be placed under investigation for “clandestine immigration”, as provided for by a controversial immigration law pushed through by right-wing parties in 2002.
The offence carries a 5,000-euro ($6,780) fine.
Italy has said it will amend its immigration laws. The authorities have denied allegations that they were slow to mount a rescue.
France has called for an urgent EU meeting after Italy requested help to deal with the influx of migrants.
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