Hundreds of people were killed when a three-metre Tsunami engulfed a narrow bay on the Indonesian coastline, smashing into two cities and sweeping away buildings.

The huge wave came in so fast that speeding vehicles were overwhelmed in seconds and those on foot had no chance to escape.

People were heard screaming in footage posted online, which showed the water line receding before the huge wave barrelled ashore.

Bodies lay partially covered by tarpaulins and a man carried a dead child through the wreckage. Hundreds of people were at a beach festival when the tsunami struck and lifeless corpses were strewn across the shoreline. The death toll stood at 384 last night but it is likely to rise, according to Indonesia’s disaster agency.

"Many bodies were found along the shoreline because of the tsunami, but the numbers are still unknown," said Sutopo Purwo Nugroho, a spokesman for the disaster agency.

"When the threat arose yesterday, people were still doing their activities on the beach and did not immediately run and they became victims.

"The tsunami didn't come by itself - it dragged cars, logs, houses - it hit everything on land."

A magnitude 7.5 earthquake triggered the wave which hit Sulawesi island. Strong aftershocks rocked the city of Palu on Saturday, which has a population of 380,000. Thousands of homes have collapsed, along with hospitals, hotels and a shopping centre.

"The situation is chaotic, people are running on the streets and buildings collapsed. There is a ship washed ashore," said Dwikorita Karnawati, head of Indonesia's meteorology and geophysics agency.

A main road to Palu is blocked following a landslide and a bridge in the nearby city of Donggala, which has a population of 300,000, has collapsed.

This has hampered rescue efforts, which are also affected by a major power cut. TV footage showed dozens of injured people being treated outside in makeshift medical tents.

United Nations spokesman Stephane Dujarric said UN officials were in contact with Indonesian authorities and "stand ready to provide support as required".

Indonesia's president said he had instructed the security minister to co-ordinate the government's response to the quake and tsunami.

Indonesia is on the Ring of Fire, an arc of volcanoes and fault lines in the Pacific Basin. On August 5, a powerful quake on the island of Lombok killed 505 people. Another series of strong quakes in mid-August killed at least a dozen. In December 2004, a magnitude 9.1 earthquake off Sumatra in western Indonesia triggered a tsunami that killed at least 230,000 people in more than a dozen countries.