Four hospitals in Palu, the paralysed capital of Central Sulawesi province, reported 48 dead and hundreds of injured but many victims were still to be accounted for, disaster agency spokesman Sutopo Purwo Nugroho told a news conference.
He said the fate of “tens to hundreds” of people involved in a beach festival in Palu when the tsunami struck was unknown.
The 10ft (3m) tsunami was triggered by a magnitude 7.5 earthquake and smashed into two cities and several settlements at dusk on Friday.
Palu, which has a population of more than 380,000, was strewn with debris from collapsed buildings.
A mosque heavily damaged by the quake was half submerged and a shopping mall was reduced to a crumpled hulk. Bodies lay partially covered by tarpaulins and a man carried a dead child through the wreckage.
The city is built around a narrow bay which apparently magnified the force of the tsunami water as it raced into the tight inlet.
In the nearby city of Donggala, home to nearly 300,000 people, a large bridge with yellow arches that spanned a coastal river collapsed.
Indonesian TV showed a smartphone video of a powerful wave hitting Palu, with people screaming and running in fear. The water smashed into buildings and the damaged mosque.
Communications with the area were difficult because power and telecommunications were cut, hampering search and rescue efforts.
Mr Nugroho said essential aircraft can land at Palu airport’s though AirNav, which oversees aircraft navigation, although the runway is cracked and the control tower damaged.
AirNav said one of its air traffic controllers, aged 21, died in the quake after staying in the tower to ensure a flight he had just cleared for departure got airborne safely. It did.
Indonesia’s president said on Friday night that he had instructed the security minister to co-ordinate the government’s response to the quake and tsunami.
Joko “Jokowi” Widodo also told reporters in his hometown of Solo that he had called on the country’s military chief to help with search and rescue efforts.
United Nations spokesman Stephane Dujarric said UN officials were in contact with Indonesian authorities and “stand ready to provide support as required”.
Indonesia is prone to earthquakes because of its location 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, most of whom died in collapsing buildings. Another series of strong quakes in mid-August killed at least a dozen on Lombok and neighbouring Sumbawa island.
In December 2004, a massive magnitude 9.1 earthquake off Sumatra in western Indonesia triggered a tsunami that killed 230,000 people in a dozen countries.