Around 20,000 people are still buried under the rubble, Iraj Sharifi, rector of the faculty of medicine in Kerman, said on Saturday.
"Five thousand people were killed on the spot in the quake and there are 20,000 people trapped under the rubble" after Friday's disaster, Sharifi said.
Meanwhile, international rescue teams have started flying in to Iran to join a frantic search for the survivors as more countries pledge aid for the relief operation.
US President George W Bush, who once branded Iran part of an "axis of evil" for allegedly developing weapons of mass destruction, and other world leaders rushed to offer whatever help they could.
The pre-dawn quake on Friday also injured about 50,000 people, government officials said, as rescuers tore at rubble for anyone buried alive.
The quake measured 6.3 on the Richter scale and struck when many people were still asleep in their homes.
About 70 per cent of Bam, a popular tourist spot some 1000km southeast of the capital Tehran with an historic citadel and other centuries-old buildings, was levelled.
Witnesses in Bam said hundreds of corpses were bundled into trucks and cars.
Distraught relatives wailed next to bodies wrapped in blankets.
Many residents were feared trapped under the rubble and the city of 200,000 in Iran's Kerman province was without water, power or fuel as night temperatures dropped below freezing.
Some people accused the government of doing nothing to help them.
"The (toll) is now more than 25,000," said a senior government official, as survivors lit fires to stay warm in the open amid the mass of flattened mud-brick houses.
Survivors using their bare hands joined search teams tearing at rubble.
Bam has been without water,
power or fuel since the quake
"I have lost all my family. My parents, my grandmother and two sisters are under the rubble," said Maryam, 17.
One grief-stricken old woman, her face covered with dirt, just kept saying: "My child, my child."
Washington has no official ties with Tehran, but Bush said in a statement: "We stand ready to help the people of Iran."
A spokesman for Bush said Washington would be offering humanitarian aid, and a US official said the State Department
would be announcing an aid package soon.
World pledges aid
The United Nations, European Union countries, Russia, China, Poland, Japan, Turkey and others also heeded Iran's appeals for help from the international community.
They pledged doctors, medical supplies, financial aid, and rescuers with sniffer dogs and equipment to locate survivors.
A 60-strong British rescue team with sniffer dogs, special cameras and listening devices arrived in Kerman, near Bam, early on Saturday.
Many countries, including the US,
have pledged aid
"We need help, otherwise we will be pulling corpses, not the injured, out of the rubble," Brigadier Mohammadi, commander of the army in southeast Iran, told state television.
Rubble-strewn pavements were lined with injured, some on intravenous drips.
State media said two hospitals had collapsed, crushing many of the staff, and remaining hospitals were full.
The injured were being ferried to neighbouring towns.
Mechanised diggers hollowed out trenches where the dead were hastily buried without rites.
A large part of the ancient citadel was destroyed, Kerman province governor Mohammad Ali Karimi said.
Dating back 2,000 years, it had sprawling fortifications, towers, buildings, stables and a mosque. It was the city's main tourist attraction.
"The city of Bam must be built from scratch," said its governor Ali Shafiee.
Houses in the date-growing area are traditionally made from mud-brick, making them vulnerable to earthquakes.
The historic citadel in Bam has
been virtually levelled
Bam is on the old Silk Road route between China and Europe used by merchants and travellers for centuries.
It is a tourist spot with inns, a theological school and bazaars.
In Tehran, state television showed people queuing to give blood. Bakeries in Shiraz said they would make bread from dusk until dawn as their contribution to the aid effort.
Quakes are a regular occurrence in Iran, an oil-producing country crossed by major faultlines in the earth's structure.
In June last year, a tremor measuring 6.3 on the Richter scale hit northern Iran, killing at least 229 people and injuring more than 1000.
Some 35,000 people were killed in 1990 when earthquakes of up to 7.7 on the Richter scale hit the northwest of Iran.
Tehran was hit by a quake of about seven on the Richter scale in 1830.