Five people were still missing, Naples prefect Claudio Palomba told a news conference.Â
Dozens of emergency workers rushed to the island while rescue divers searched the waters off the coast, he said.
A wave of mud, debris and stones broke away from the island's highest mountain on Saturday and crashed down over houses and roads in and around the town of Casamicciola Terme.
Photographs and aerial video showed buildings smashed by the landslide and several cars pushed into the sea by what one resident described as "a waterfall of water and mud".
Search teams pulled the body of a young girl from her family home on Sunday after recovering the body of a 31-year-old woman on Saturday.
A second woman's body was recovered on Sunday afternoon.
Densely populated Ischia is a volcanic island some 30 kilometres from Naples that draws visitors to its thermal baths and picturesque coastline.
Episodes of heavy rainfall are becoming more common and more intense in the light of climate change, experts say, exacerbating hydrogeological risks in many parts of Italy.
Statistics show Ischia has a large number of houses that were built illegally, putting inhabitants at permanent risk from flooding and earthquakes - which have often hit the hilly island in past years.
The fatal landslide has reignited political controversy over pardons for unlawful buildings granted in recent decades and the reluctance of some politicians to address the issue.
"People must understand that they can't live in some areas and buildings in risky areas must be torn down," Campania governor Vincenzo De Luca told state broadcaster RAI on Sunday.
Italy's new right-wing government led by Giorgia Meloni held a cabinet meeting on Sunday and issued a decree aimed at providing swift help to people in need following the disaster, including some 230 people who were evacuated.
The decree earmarked an initial aid package of two million euros ($A3.08 million) and envisaged a suspension of tax payments for residents until the end of the year.
