Rescue workers had evacuated 158,000 people in the most imminent danger from a breaching of the lake, which was created when landslides blocked a river in the May 12 earthquake that devastated huge tracts of Sichuan province.

The disaster has left nearly 88,000 people dead or missing, while 15 million others have been displaced.

Although the Tangjiashan lake is little more than a fortnight old, it is already holding enough water to fill 50,000 Olympic swimming pools and could cause immense damage if it overflowed.

Premier Wen Jiabao told a meeting of the Cabinet's quake relief headquarters Tuesday that handling this and three dozen other "quake lakes" in China's tremor-hit southwest was the "most pressing" task, the China Daily reported.

One of Wen's deputies, Vice Premier Hui Liangyu, confirmed the huge importance attached to the task after visiting the site on Tuesday.

"It is threatening millions of lives in the area downstream and any negligence will cause new disasters to people who have already suffered the quake," he said, according to the state-run Xinhua news agency Wednesday.

But the sense of urgency appeared not to have seeped down completely to grassroots' levels, with one official complaining local governments did not take the risk seriously enough.

"The speed of evacuation is somewhat slow," a local water resources official told AFP.

"Sometimes local governments think that evacuation is too much trouble, and they're betting it won't really be necessary, because they're not sure how big the risk might be," he said.

Water in the Tangjiashan lake is rising two metres (6.6 feet) every day and by Tuesday it was only 23 metres from the lowest level of the barrier, the China Daily said, citing Cai Qihua, a local water management official.

More than 600 engineers and soldiers were at the lake working non-stop to dig a diversion channel, but they would not be able to complete the task until June 5, according to the China Daily.

Up to 1.3 million people will have to be relocated if the lake barrier is breached, and officials have already started preparing for that contingency, it said.

The village of Tianlin, among the first that would be flooded if the barrier bursts, was one of several communities holding evacuation drills Tuesday, the paper reported.

People went through the village banging gongs and giving instructions via loudspeakers, directing the 680 residents to seek higher ground in 20 minutes -- the time they will have to save themselves in the worst-case scenario.

The May 12 earthquake, which measured 8.0 on the Richter scale, flattened entire towns and villages across an area of mountainous Sichuan the size of South Korea.

The death toll from the disaster has reached 68,109, with another 19,851 people missing, a government spokesman said on Wednesday.

The quake has also affected China's cultural heritage, causing minor damage to seven of the famed 2,200-year-old terracotta warriors in the northern city of Xian, the Beijing News daily said Wednesday.

Another relic severely damaged was the 2000-year-old Erwang Temple, in the same area as the UNESCO World Heritage-listed Dujiangyan irrigation system, Xinhua reported.

The quake damaged 1,645 cultural relics in Sichuan province alone, including 148 regarded as precious, Xinhua said

Heightening the sense of fear still stalking China's southwestern Sichuan province, a strong aftershock measuring 5.4 on the Richter scale rattled the area Tuesday.

Xinhua said 420,000 houses had collapsed in Sichuan's Qingchuan county as a result of the aftershocks and 63 people there had been injured, six critically.

However, officials said Wednesday they did not expect the national economy to take a major hit from the quake.

"Sichuan only accounts for four percent of China's overall gross domestic product," said Mu Hong, deputy director of the National Development and Reform Commission, the nation's top economic planning agency.

"The area severely impacted by the quake accounts for less than one percent. So the impact on the national economy will be there, but it will indeed be limited," he told a briefing in Beijing.

related report
China quake survivors rescued as rain threatens millions
The rescue of 40 half-starved people from a remote village 16 days after China's earthquake provided a rare piece of good news on Thursday as rain threatened more misery for millions of survivors.

A military helicopter plucked the villagers from their quake-shattered mountain homes on Wednesday after the group survived on little more than rice and wild herbs, state press reported.

Their rescue was the latest in a string of extraordinary survival stories that have emerged from the horror of the May 12 quake in Sichuan province, which killed over 68,000 people and displaced more than 15 million others.

But the enormous scope of dealing with the its aftermath remained the main focus on Thursday, as the danger of potentially devastating floods rose again with steady rain falling across the quake zone.

The most pressing priority is the draining of a so-called "quake lake", a massive body of water sitting above millions of people that was formed after the huge tremor triggered landslides and blocked a river.

Officials have warned that rainfall would further swell the lake at Tangjiashan and, if it burst, flash floods would sweep across large tracts of Sichuan, bringing with it torrents of rubble from the quake.

Rescue workers have already evacuated 158,000 people in the most imminent danger from any breach of the lake at Tangjiashan.

As earth-movers continued the delicate task of clearing a channel for a controlled release of the water, officials forged ahead with an all-out effort to prepare areas further downstream for a massive evacuation.

In the hard-hit city of Mianyang, authorities have put residents through repeated evacuation drills.

"The efforts are aimed at getting all 1.3 million residents on the move within four hours in case the quake lake's bank fully opens," said the city's Communist Party chief, Tan Li.

The 40 survivors rescued on Wednesday came from Yangjiakou village, which was about 20 kilometres (12 miles) from the nearest town.

The group was prevented from escaping due to landslides triggered by the quake, the West China Metropolitan Daily said.

The survivors, who included local villagers and a group of mining company workers, were flown to a nearby temporary camp for earthquake survivors, the paper reported.

Meanwhile, China continued a mammoth effort to feed, house and meet the medical needs of the millions of other survivors.

Foreign assistance has provided support to the effort, the latest being 153 giant tents donated by the US Defense Logistics Agency, which arrived in Sichuan's capital Chengdu on Wednesday.

However, China has repeatedly said it needs millions of tents to shelter quake victims and minimise the risk of serious disease outbreaks as the warm, rainy, summer months approach.

The foreign help has been more than matched by an unprecedented outpouring of domestic donations of money and supplies.

From home and abroad, about 35 billion yuan (five billion dollars) has been donated.

But worryingly in a country well known for graft at all levels of society, numerous reports have already emerged of quake aid being abused or diverted by corrupt officials.

In an acknowledgement of the problem, the ruling Communist Party has set up a special body to oversee the proper use of such aid and vowed "quick, strict and harsh penalties" for abuses.

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