The Greek-registered Ice Prince went down at 0045 GMT off the the southern English coast, said Britain's Maritime and Coastguard Agency (MCA).
The ship's stern is on the sea bed while the bow is poking out of the water.
All 20 crew were rescued by lifeboat and helicopter after the vessel's cargo of 5,258 tonnes of sawed timber shifted, and the boat listed on Sunday.
"The general cargo vessel Ice Prince sank in very rough weather approximately 26 miles (42 kilometres) south south-east of the Portland Bill," an MCA spokesman said.
"She had been monitored throughout the evening and night by the French Coastguard tug Abeille Liberte and a further JP Knights tug, the Anglian Earl. Salvors are aboard both tugs.
"Portland Coastguard along with their French Coastguard colleagues in Cross Corsen are warning other approaching shipping of the hazards in the area.
"Just before she sank, the crew of the Abeille Liberte reported that further deck cargo had been lost to the sea and that the angle of the list had increased, but that visibility is very poor at present in very rough weather.
"The tug is remaining on scene to act as a guard ship to the wreck."
An MCA surveillance aircraft was to overfly the scene to check out the extent of the debris. The vessel was carrying an estimated 313 tonnes of fuel oil and counter-pollution contingency plans were being reviewed.
Local police forces have been warned that cargo or oil could have an impact on the coastline in the coming days.
One crewman, a 41-year-old Greek national, suffered a broken leg, while others sustained bumps and bruises.
The Ice Prince, which was more than 100 metres (328 feet) long and displaced 6,395 tonnes, issued an alert at 1900 GMT on Sunday, reporting that it was in difficulty, rolling heavily in very poor weather.
The vessel was heading for the Egyptian port of Alexandria.