MANILA, March 14 (Reuters) - Philippine authorities have increased efforts to contain an oil spill from a sunken fuel tanker that has affected coastal towns and was still spreading, the environment ministry said on Tuesday, as the country grapples with cleanup challenges.

Improvised spill booms made from cogon grass and coconut materials were helping to restrict oil leaking from MT Princess Empress, the Philippine-flagged tanker that encountered engine trouble in rough seas on Feb. 28 before it went down off central Oriental Mindoro province, the ministry said in a statement.

The vessel was carrying about 800,000 litres (211,338 gallons) of industrial fuel oil when it sank, according to the coast guard.

"The use of improvised spill booms is a feasible precautionary measure to prevent damage to marine environments," it said, adding that the materials are readily accessible to communities at risk.

Marine scientists at the University of the Philippines have warned that the oil spill could also hit the Verde Island Passage, a body of water between Batangas and Mindoro provinces south of Manila, which they said has the highest concentration of marine biodiversity on the planet.

The spill could also reach the northern part of Palawan island, home to some of the country's white-sand beaches.

Resorts in Oriental Mindoro, also known for world-class beaches and dive spots, have already been reeling from the impact of the oil spill, as tourists cancel reservations during what is supposed to be peak season.

A Philippine senate panel on Tuesday opened an inquiry into the incident, with legislators demanding the tanker owner, RDC Reield Marine Services Inc, to participate in the cleanup drive and extend immediate financial aid to affected communities.

They also raised concerns about whether the tanker owner could file insurance claims despite questions about the ship's permit to operate.