Thursday update: The ship is now anchored with officers aboard, two tugboats helped secure the vessel and provided firefighting services.
British forces based in the Falkland Islands responded to a distress call by the 10,000-ton cruise ship Le Boreal from Ponant Cruises on November 18, according to a statement.
The ship reported suffering a major engine room fire, which caused the loss of all power and left the ship drifting.
A north-westerly gale placed the ship in real danger of grounding on Cape Dolphin, East Falkland.
The captain ordered the ship, with 347 passengers and crew, to be abandoned early yesterday morning.
According to one source familiar with the operation, passengers were in lifeboats for up to seven hours. Additionally, he said that the company tries to keep its ships close to each other in remote areas, with the sister-ship, the Austral, also taking some passengers.
Working closely with the Falkland Islands Government, British Forces enacted a major search and rescue plan.
Two Royal Air Force Sea King Search and Rescue helicopters were scrambled, along with two other support helicopters, a C130 Hercules and a Voyager aircraft for command and control. The Royal Navy patrol vessel HMS Clyde was despatched to the scene, as were Dutch tugs which support British Forces in the Falkland Islands.
In an operation coordinated from Mount Pleasant, Royal Air Force Search and Rescue helicopters, supported by British International and Bristows helicopters, successfully winched 79 people from the deck of the Le Boreal and from two life rafts in the water.
All of these evacuees were brought to the British Forces Base at Mount Pleasant where they received care, clothing, food and medical attention. HMS Clyde assisted two further lifeboats with over 200 evacuees on board, ensuring they were brought to safety.
All passengers and crew from Le Boreal have been accounted for and are being looked after on the Falkland Islands. The vessel itself is now in a stable condition and two Dutch Tugs, under contract to British Forces, are now assisting to bring the vessel alongside in the Falkland Islands for a detailed assessment of her condition.
Defence Secretary Michael Fallon said: "This successful rescue in the Falklands this morning demonstrates how our Armed Forces are always ready to help those in peril. The swift action taken by Royal Navy and Royal Air Force crews, working with civilian counterparts, saved many lives and prevented this developing into a human tragedy."
Commander British Forces South Atlantic Islands, Cdre Darren Bone, said:
"We responded with everything we had yesterday to assist in what was an extremely complex and hazardous rescue operation in difficult conditions but I am delighted that we can report all of the passengers and crew of the vessel are safe and well and the vessel itself in a stable condition. This was a huge team effort involving close liaison with the Falkland Islands Government and I am enormously impressed with the reaction by all the British forces involved, it was an exemplary performance all round."