"We have moved from search and rescue to search and recovery," said army spokesman Major Farooq Nasir on Friday.
"The technical teams have told us the chance of survival is now less than 2%."
Army teams will now begin clearing the rubble and spraying the wreckage with disinfectant, he said, as more bulldozers and heavy earth-moving equipment begin arriving in Muzaffarabad.
The 7.6-magnitude quake, which struck Pakistan-administered Kashmir on Saturday, killed more than 25,000 people on the Pakistan side of the divided region and made 2.5 million people homeless, according to the military.
Bodies under rubble
Hundreds, probably thousands, of bodies remain beneath the rubble, including hundreds of children who were buried alive at their desks when their schools collapsed around them.
Pakistani and UN officials have said the toll is sure to rise significantly as the rubble is cleared.
Search and rescue teams rushed to Pakistan from around the world in the days after the quake, but by Thursday night most were packing up their equipment, knowing that the chances of survival after six days were almost nil.
Officials say the toll is sure to
rise as rubble is cleared
Nasir said the heart-breaking decision to officially call off the rescue efforts came during a meeting overnight on Thursday between army officers and aid agencies in Muzaffarabad, the capital of Pakistan-controlled Kashmir.
Search and rescue over
The coordinator of UN relief operations, Alain Pasche, agreed there was virtually no hope of finding survivors but it was "up to the Pakistan government to declare the search and rescue phase over".
A member of British team Search and Rescue Assistance in Disasters said they would go to the Pakistani capital Islamabad in the hope of being redeployed to areas where there still could be people trapped alive under the rubble.
"We would have liked it if some of the teams could have been assigned a helicopter so they could have jumped from village to village in the remote areas," said Geoff Parkinson.
"We could have made a difference."
One of many international rescue teams in Pakistan, it had already rescued a blind man from the rubble but lost a battle to extract a 20-year-old woman who was now believed dead.
Survivors of the earthquake in Muzaffarabad spent a sixth night in the open, kept awake by the rumble of aid trucks and an aftershock early on Friday that set dogs howling.
The aftershock measured 5.3 magnitude at around 2am (2049 GMT) on the US Geological Survey's sensors.
Local meteorological officials said there were 70 aftershocks in a 24-hour period between Wednesday and Thursday, and the seismic activity was likely to continue for months and maybe years.
Quake survivors spent a sixth
night in the open
People who had been sleeping on the pavement leapt to the middle of the road, eyeing what was left of buildings warily before eventually drifting back to sleep.
The UN's top emergency relief co-ordinator, Jan Egeland, told the BBC after visiting the area: "This is our worst nightmare - a very major earthquake in the Himalaya mountains just before winter sets in, with millions of people affected and more than a million people homeless."
The army has begun airdrops to villages cut off from help in remote valleys of the Himalayan foothills of Pakistani-administered Kashmir and North West Frontier Province.
Where valleys are too narrow and steep-sided for helicopters to fly, mule-trains are being sent to carry in the food, blankets and tents people need to survive.
Egeland called for helicopters to
help relief efforts in Pakistan
Egeland said the worst fear was that the toll could rise sharply because of disease and exposure. He urged international donors to provide more helicopters and tents.
"They will now have their six, seventh nights out in the cold, perhaps even without a tent," he said. "They are in a desperate situation - we need more helicopters to reach them, we need helicopters soon."
The international community has pledged $350 million and the Pakistani people have donated more than $38 million in cash and more in kind.
But the general in charge of Pakistan's biggest peacetime relief operation gave a chilling assessment of the chances of getting relief to those in need anytime soon.
"It is an exaggeration that we will reach each and every person in a matter of days," Major-General Farooq Ahmed Khan said.
"The damage to infrastructure is so grave, destruction is so widespread, that we cannot reach so quickly to each and every area," he said.
Khan said every effort was being made to get people under tents before the winter began in earnest, as northern areas had already had their first snowfall, but he was not sure if it was possible.
"The damage to infrastructure is so grave, destruction is so widespread that we cannot reach so quickly to each and every area"
Major-General Farooq Ahmed Khan
He said the country was running short of blankets so the government was importing two million more.
"All tents have been bought and all factories are running round the clock and booked," he said.
Those with radios heard a Wednesday night address by President Pervez Musharraf in which he promised the aid effort would improve.
"He's a liar," said Sartaj Akhtar Abassi. "You can see people are still living in the open; there's been no relief."
In Islamabad, police launched a criminal investigation into the builders of an apartment building that collapsed during the earthquake, killing at least 40 residents, police chief Sikandar Hayat said. The 10-storey building was the only structure that collapsed in the capital.
"We will arrest all those who didn't perform their duty well," he said. "They might be the builders, contractors or supervisors."
Lack of aid
Across the heavily militarised border, in Indian-administered Kashmir, the army is faring a little better but residents are furious with the civil administration for the lack of aid.
Often vilified as an occupying force and accused of human-rights abuses, the Indian army is ferrying victims to hospital by helicopter, reaching far-flung villages and helping organise the relief effort.
Residents in Indian Kashmir are
furious about the lack of aid
"The state government is full of corruption and is doing nothing," said 50-year-old farmer Syed Mukhtar Hussein. "The army is never dishonest."
But not everybody in Indian Kashmir has been won over. Some say the soldiers have not done enough, and could have scaled back their constant and all-pervasive security patrols to bolster the aid effort, especially given the desperation the people faced.