The Sewol, carrying 476 passengers and crew, capsized on Wednesday on a journey from the port of Incheon to the southern holiday island of Jeju. Thirty-two people are known to have died.
The 69-year-old captain, Lee Joon-seok, was arrested in the early hours of Saturday on charges of negligence along with two other crew members, including the third mate who was steering at the time of the capsize.
Prosecutors later said the mate was steering the Sewol through the waters where it listed and capsized - for the first time in her career.
Asked why the children had been ordered to stay put in their cabins instead of abandoning ship, Lee, apparently overwhelmed by the scale of the disaster, told reporters he feared they would have been swept out to sea in the strong, cold current.