Engineers were last night battling to drain an unstable lake created by China's deadliest landslide in decades, fearing it could burst and swamp devastated areas where people are still hunting for survivors.

At least 702 people died in northwest China's Gansu Province when a tsunami of mud and rocks engulfed swathes of the small town of Zhouqu on Sunday morning, and another 1,042 are missing, Gansu's civil affairs chief, Tian Baozhong, said.

Despite fading hopes, grief-stricken locals kept waiting and weeping beside buried and destroyed homes where relatives and friends were entombed, hoping at least to find the remains of loved ones.

"My niece is buried under there. She is a high school student, such a good girl," said weeping 42-year-old Yin Linfeng, who survived the landslide because she had been away.

"She was buried in the rubble when she was looking after my house ... I will not give up. I want to see her body if she is dead. It was all my fault."

Another survivor, Yang Zhukai, began the sad task of making simple coffins for the 10 to 20 relatives killed by the mudslides.

"These are all for relatives, for relatives killed by the mudslide. It was so unexpected, a huge landslide like this. There's nothing left. We managed to escape with our lives. As far as relatives, 10 to 20 died from my village," he said.

Throughout the area, bodies were seen wrapped in blankets and tied to sticks or placed on planks and left on the shattered streets to be picked up.

A 52-year-old Tibetan man was pulled from a collapsed apartment yesterday, only the second person found alive since Sunday in a town buried in sludge up to 7 meters deep in places.

Search efforts under a blazing sun and the pain of finding only corpses were also taking a toll on survivors, medics said.

"There are people who have spent several days looking for their family members without any food or water. Some of them suffered from hypoglycemia, some fainted, some had heatstroke," said military doctor Wang Puxuan.

The landslide was the worst to hit China in six decades, and the most deadly single incident in a year of heavy flooding that had already killed nearly 1,500 people.

There is no sign of a let-up in the onslaught, with tropical storm "Dianmu" heading for northern China, and expected to bring strong rains as far away as the landslide area.

Fearing new downpours, local officials focused on preventing a catastrophic overflow of the brimming new lake in the center of Zhouqu.

With basic food and water needs on their way to being met, officials are increasingly focused on the loose dam thrown down by the landslide.

Water levels behind the barrier fell slightly after controlled explosions created a channel to funnel some off.

"Our county is surrounded by mountains, the barrier lake has clogged the river, and once water comes from upstream, we will definitely be flooded," said He Dong, a 36-year-old survivor of the mudslide. "This is a great danger to us."

Thousands of people have already been evacuated from villages downstream as a precaution, as the surge of mud and floodwaters would be almost impossible to escape.

Top state leaders met early yesterday to discuss rescue and relief work.

"It is now a critical time for disaster relief and rescue work. We must give the highest prominence to the protection of people's lives and properties," the Politburo Standing Committee said in a statement after the meeting.

The meeting was presided over by President Hu Jintao, who is also the Communist Party's general secretary.

Acknowledging the progress rescuers had made, the statement urged authorities to double their efforts in searching for survivors, draining lakes and clearing sludge.