The plane, carrying 58 passengers and crew, clipped an overpass soon after take-off from Taipei's Songshan airport and plunged into a river on Wednesday morning.
Fifteen survivors were pulled from the wreckage, while 12 people remained missing. Many of the passengers were mainland Chinese tourists.
"This morning we have some 60 divers going underwater to search" in addition to 20 boats scouring the river, said Liu Yung-chou, an official from the national fire agency.
Cold weather, poor visibility and rising water levels were hampering rescue efforts, with officials admitting they were now "not optimistic" about finding survivors.
Rescuers with flashlights scoured through the rear and central parts of the plane after they were brought to shore by crane.
Earlier in the day survivors were ferried to safety in dinghies as rescuers tried to pull people out with ropes.
Dramatic amateur video footage showed the TransAsia ATR 72-600 hit an elevated road as it banked sidelong towards the Keelung River, leaving a trail of debris including a smashed taxi.
"I saw a taxi, probably just metres ahead of me, being hit by one wing of the plane. The plane was huge and really close to me. I'm still trembling," one witness told TVBS news channel.
Desperate crew members shouted "Mayday! Mayday! Engine flameout!" as the plane plunged out of the sky, according to a recording thought to be the final message from the cockpit to the control tower, played on local television.
Aviation officials said they had not released the cockpit recording, suggesting it may have come from amateurs monitoring the radio.
"An engine flameout refers to the engine shutting down in flight," said Daniel Tsang, founder of Hong Kong-based aviation consultancy Aspire Aviation.
"The engine stops producing thrust and the combustion process fails and no longer generates any forward propulsion to the aeroplane."
But Mr Tsang said pilots were "very well trained" to deal with the failure of one engine and the causes of the accident were likely to be more complex.
Lin Chih-ming, head of Taiwan's Civil Aeronautics Administration, said the TransAsia ATR 72-600 was less than a year old and was last serviced just over a week ago.
The pilot had 14,000 flying hours and the co-pilot 4,000 hours, he added.
The airline said it had received the plane in April last year and it was the newest model of the ATR.
Pilot hailed as a hero
Aviation experts applauded the deceased pilot for apparently steering the plane away from populated areas and high-rise buildings to avoid causing more damage.
"Based on the flight path, the pilot deviated and tried to avoid obstacles," Mr Tsang said.
"The pilot apparently made a conscious effort to avoid further and unnecessary casualties by ditching in the river.
"It was a very courageous move."
Emotional citizens posted their praise and condolences on social media sites.
"I believe the pilot managed to steer the plane away from high-rise buildings, he is a hero," Gin Oy, a writer and actress, said on her Facebook page.
Tales of miracle escapes emerged, as television footage showed a father cuddling his toddler son as they were taken to shore by boat after being rescued.
Together with the child's mother, the family had switched seats on the plane "out of a hunch" that saved their lives, the United Daily News said.
"The family originally sat in the heavily damaged left side but Lin Ming-wei felt uneasy after he heard noises before taking-off and requested to switch seats," the report quoted Dai Bi-chin, a friend of the family, as saying after visiting them in hospital.
Their new seats put them next to a crack in the plane after it crashed, and the newspaper said Lin was able to pull his wife to safety and then revive his son after spotting him in the water, blue and unresponsive.
The Civil Aeronautics Administration has grounded a total of 22 ATR planes from two Taiwanese airlines for safety checks after the accident on a domestic route to the island of Kinmen.
The chief executive of TransAsia, Peter Chen, bowed deeply at a televised news conference as he apologised to passengers and crew.
Chinese premier Li Keqiang said his government had offered Taiwan any help necessary following the crash, the second fatal crash for TransAsia after 48 people were killed in July.
ABC/AFP
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