Six passengers out of the 25 on board the ferry have been saved, while the search is still ongoing for another four missing people.
There were many children on the boat, the security and hospital sources added, without giving the ages of the two children who died.
Police said they have arrested the captain of the cargo boat and his deputy after that accident, one of many that happen on the Nile and off Egypt`s coast each year.
In the worst accident of its kind, in February 2006 an Egyptian ferry sank in the Red Sea, killing more than 1,000 people.
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