The mudflow, blamed on exploratory drilling gone wrong, swamped homes and damaged roads, a railway and a gas pipeline, causing overall losses of 3.04 billion dollars since it began in May, a government agency said.

The National Development Planning Agency said in a report the losses were both direct and indirect as the crater has disrupted the local economy of the affected area near Surabaya, East Java, the Antara news service said.

The losses could rise to 44.7 trillion rupiah (4.91 billion dollars) unless the steaming mud hole stops disgorging sludge, the report said, according to Antara.

Indonesia's government this week agreed to spend 275 million dollars to relocate the infrastructure damaged by the mud. It is also trying to plug the crater by dropping thousands of chained concrete balls into the hole.

Some experts say the audacious and experimental home-grown plan will not work. Hundreds of chains of heavy balls have been dropped into the crater, but the mud is still flowing.

The planning agency's report also recommends the government set a deadline for compensating the people affected by the mud, a cost to be borne by the drilling firm accused of triggering the disaster, PT Lapindo Brantas.

The sludge has inundated some 600 hectares (1,500 acres). Experts are unsure how long the crater will spew mud if left unchecked, with some suggesting it could be years.

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