Authorities are rushing to the assistance of the Hong Kong-flagged bulk carrier, which broke down north of Cairns.
On its present course, the broken vessel, the ID Integrity, is set to drift over Shark Reef.
With no cargo the ship has more clearance, but running aground on the isolated reefs is a concern.
A broken-down cargo ship was drifting towards Australia's Great Barrier Reef Saturday, with fears of major damage if it were to run aground at the World Heritage-listed site.
Authorities were rushing to the assistance of the Hong Kong-flagged bulk carrier, the ID Integrity, which broke down north of Cairns.
The Australian Maritime Safety Authority (AMSA) said the ship had suffered an "an engine breakdown en route from Shanghai" and was drifting towards Shark and Vema reefs on the outskirts of what is the world's biggest coral reef.
"The crew is currently attempting to repair the engine, in the hope that the vessel will be able to resume its passage," AMSA said in a statement.statement
"Contingency planning is under way in case the crew cannot get the engine restarted."case
An emergency towing ship, the Pacific Responder, has been dispatched to the Coral Sea along with two tug ships but the first vessel would not reach the unladen ID Integrity until Sunday morning, AMSA added.
Simon Meyers from Australian Reef Pilots, a company which provides aerial surveillance of shipping channels around the reef, said it was hard to tell whether the ship would run aground.
"It is not certain at this stage whether the ship is at risk of hitting those isolated outer reefs," he told ABC Radio.
But the ship's owner, Hong Kong-based ID Wallem said it looked likely to pass over the reef without incident.
"On its present course, the vessel will drift over Shark Reef but is not in danger of grounding as the ship has sufficient clearance to pass over the reef," ID Wallem said in a statement cited by Australian Associated Press.
ID Wallem said there was no cargo on board the ship or pollution associated with its engine problems and the "ship manager is working closely with all authorities".
"The ship manager and crew of the vessel will continue to work to quickly restore power and take measures to avoid any environmental impact in Australian waters," the ship management firm said.
It is not the first time a freighter has run into trouble on the Barrier Reef. The Chinese-registered coal carrier Shen Neng 1 foundered in April 2010 leaking tonnes of heavy fuel oil and threatening an ecological disaster.
While a major catastrophe was ultimately avoided, the huge ship gouged a three kilometre-long (1.8 mile) scar in the world's biggest coral reef. The vessel was stranded for nine days before salvagers could refloat it.
Senator Larissa Waters from the environmentally-driven Greens party said Saturday's breakdown was a reminder of the dangers of turning the reef into a "coal and gas superhighway" to Asia.
"While we all wait and hope that this ship can be rescued before it creates a disastrous spill, the Australian government should now take responsibility for the Great Barrier Reef and stop this headlong rush to boost fossil fuels exports at the expense of the climate and the environment," she said.