The governor of the stricken Kerman province said 490 people had been killed and 900 injured when the 6.4-magnitude quake struck on Tuesday.
"These figures are not final and are expected to increase further," governor Muhammad Ali Karimi told public radio on Thursday.
He said the search for victims was still going on in the mountain village of Houtkan, which was demolished in the quake, the worst in Iran since the Bam earthquake of December 2003 that killed more than 31,000 people.
At least 500 people have been
About 8000 homes were damaged or destroyed in the Zarand region closest to the epicentre of the quake, leaving thousands homeless as temperatures dropped below freezing and rain and snow hampered rescue efforts.
Hundreds of rescue workers and soldiers were digging by hand through the rubble of mud-brick buildings as blocked roads made it impossible for heavy earthmoving equipment to reach some villages.
Zarand governor Javad Rachidi, spoke of 500 dead and 990 injured.
Delay in aid
President Muhammad Khatami, whose government is facing protests from stricken villagers at the delay in aid reaching some of the most devastated areas, said on Wednesday that Iran would accept international help if offered.
"We are not calling for aid [from abroad] but we will accept it as we did before [after the Bam disaster]," he said.
"Up to now about 9400 tents, 60,000 blankets and a large quantity of basic supplies have been distributed"
Muhammad Ali Karimi,
US President George Bush, who has warned of possible military action against Iran over its nuclear activities, was among those offering help for quake victims.
Kerman governor Karimi said he was satisfied with the distribution of emergency aid despite residents holding a number of protests to highlight their lack of tents, blankets and food.
"Up to now about 9400 tents, 60,000 blankets and a large quantity of basic supplies have been distributed," Karimi said. "The distribution will be quicker once the weather improves."