The grim assessment came as bulldozers and recovery workers pressed on with the gruesome task of pulling out corpses from the rubble and the United Nations appealed for help for the tens of thousands of survivors left homeless.

Iranian President Mohammad Khatami thanked the United States and other nations who have rushed to provide aid to the quake-stricken region but ruled out the prospect of political dialogue with Washington without a radical shift in US policy after decades of enmity.

On a visit to the provincial capital of Kerman, Khatami said the death toll in the flattened fort city of Bam and surrounding villages was about 40,000, but denied earlier estimates by local officials that it could top 50,000.

"Very probably, there are still people under the rubble," he said.

Victims of Friday's quake were being buried as soon as their corpses were unearthed as rescuers sought to prevent disease epidemics and the authorities sought to identify hundreds of anonymous bodies with a computer slideshow of sometimes gruesome photographs.

Only 2,000 people have been pulled out alive since Friday's quake, which measured 6.7 on the Richter scale, destroyed Bam and its ancient citadel, a world heritage site and a major tourist attraction that once was one of the largest mud-brick structures on the planet.

Iran's official news agency IRNA said canaries saved two children buried under the rubble by attracting rescuers' attention with their singing.

But Ted Purn, a UN spokesman at the base where the world body is coordinating a massive international humanitarian effort involving 1,700 staff from more than 30 countries, said the true death toll may never be known.

"This now more of a recovery rather than a rescue effort," he said. "There may be one or two survivors who still could be found, although the chances are quite low."

Khatami said the 2,000 year-old citadel would be rebuilt "whatever it costs" after promising to rebuild Bam within two years.

The disaster raised prospects of a rapprochement between Iran and the West as Tehran opened up to offers of aid from friend and foe, including the United States which has branded Iran part of an "axis of evil."

In an interview published Tuesday in the Washington Post, Secretary of State Colin Powell said the United States was "open" to the possibility of dialogue with Iran after seeing encouraging signs, including its acceptance of snap UN inspections of its nuclear sites.

But Khatami said there first needed to be a "profound change" in US policy towards Iran. Diplomatic relations have been severed since 1980, following the 1979 Islamic revolution in Iran that toppled a US-sponsored regime.

"What is the point of negotiations if there is no trust that will enable us to reach a common position," Khatami said.

On Sunday, a first US military flight to Iran since the end of the hostage crisis at the American embassy in Tehran in 1981 carried emergency aid to the population of Bam.

Some 80 US doctors and rescue workers are in southern Iran and en route to the earthquake zone, with an initial team of some 20 Americans arriving in Bam Tuesday.

"You are talking about politics, but these are doctors. They are not Mr. Bush or Mr. Rumsfeld coming to kill us," Deputy Health Minister Mohammad Akbari said. "This is not help from Mr. Bush. This is help from humanitarian people.

Iranian Foreign Minister Kamal Kharazi later helicoptered into a camp set up to provide logistical support to foreign aid, and said he would be meeting the US party.

Countries as far afield as Japan, India and Mexico as well as Lebanon and Cyprus have announced their participation in the relief drive while neighbouring Iraq -- which was at war with Iran in the 1980s -- also sent a 55-strong medical team.

The oil-rich Gulf states late Monday earmarked 400 million dollars of aid for victims of the earthquake, hours after the United Nations appealed for more money as it began assessing the damage.

UN agencies, working around the clock since the quake struck, have already given about half a million dollars (400,000 euros), but Rashid Khalikov, deputy director of the UN Office for the Coordination of Humanitarian Affairs (OCHA), said "we need much more."

"The biggest fear is that as soon as the news about the earthquake disappears from TV screens it will be reflected in support from the international community in terms of contributions to the activities to help the victims," Khalikov said.

Francis Deng, UN chief Kofi Annan's representative for internally displaced persons, urged the international community to help at least 70,000 people left homeless by the disaster, saying the task may be too onerous for Tehran to deal with alone.

All rights reserved. Copyright 2003 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

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