Pakistan's government plans on receiving $5.2 billion of aid for reconstruction of the ravaged north, where towns were flattened and nearly 86,000 people died. Another 1350 died in Indian territory.
The government says $2.4 billion has been pledged, but less than 10% actually given.
The United Nations, facing its own shortfall of quake donations, warned that relief efforts could collapse without sustained funding.
"The earthquake of October 8 was an unprecedented disaster. It requires us to mount an unprecedented response," Annan told representatives from about 50 countries, including India.
"There are urgent humanitarian needs that demand our continuing attention. The difficult terrain makes this one of the most challenging relief operations ever undertaken," he said.
Opportunity of a lifetime
Pakistan's president said the calamity provided "an opportunity of a lifetime" to resolve the half-century dispute with India over divided Kashmir.
"If leaders fail to grasp fleeting opportunities, they fail their nations and peoples," General Pervez Musharraf told the conference. "Let success and happiness emerge from the ruins of this catastrophe, especially for the people of Kashmir. Let this be the Indian donation to Kashmir."
Contributions to Pakistan's recovery:
Asian Development Bank, $1 billion
World Bank, raised pledge to $1 billion
United States, raised pledge to $510 million
Islamic Development Bank, raised pledge to $501 million
Saudi Arabia, $473 million
China, raised pledge to $300 million
International Monetary Fund, $275 million
-The Associated Press
The rivals have fought two wars over Kashmir, which is divided between them but claimed in its entirety by both.
Since the quake, they have agreed to open five crossing points on the militarised frontier to facilitate the flow of relief and let separated families reunite, but civilian crossings have been delayed by bureaucratic wrangling.
India has also offered $25 million in aid.
Aljazeera's Ahmad Barakat, reporting from Islamabad, said Annan called on the international community to offer generous aid to Pakistan, to overcome the earthquake disaster and shelter more than 3.5 million homeless people still living in tents, he added.
In a speech delivered during the opening of the conference, the Pakistani president and prime minister confirmed that they had set up committees for transparency and accountability to monitor the use of aid money.
The Pakistani opposition boycotted Saturday's conference to protest against the way the crisis is being dealt with.
The opposition says Musharraf has ignored parliament and is depending on the army for reconstruction.
Rise in aid the Asian Development Bank on Saturday pledged to provide about $1 billion to Pakistan, with the US also raising its aid.
"Having seen first-hand the courage and resilience of the survivors, I am convinced that the affected areas will need to not only fully recover, but be built in a way to provide a better future for the children," the president of the Philippine-based Asian Development Bank, Haruhiko Kuroda, said in a statement announcing the pledge.
Pakistan says it has received
only 10% of the aid pledged
The United States nearly tripled its pledge to quake-hit Pakistan to more than half a billion dollars on Saturday, telling a donors' conference that it would stand by its key ally in the war on terror during its hour of need.
America had already promised Pakistan $180 million, of which $54 million had been spent.
But USAid chief Andrew Natsios raised the offer to $510 million, including $100 million in cash.
"The US pledges today our continuing support to our friend and ally, Pakistan," Natsios said at the conference.
Race against time
About three million people lost their homes in the quake, with hundreds of thousands still living in tents and an unknown number with no shelter.
Aid workers say that with snow already falling in the quake zone and a harsh Himalayan winter forecast, time is fast running out to prevent a second wave of deaths from exposure, hunger and disease.
Kofi Annan (L) chided nations
for a weak and tardy response
On Friday, Annan toured the quake zone and chided nations for a "weak and tardy" response to the quake, and seemed to lower expectations for the conference, saying if enough money was not raised he would try for additional funding later.
Among the most pressing needs are warmer shelters to guard against night time temperatures that can drop to -12C (10F). Infants and children - more than 2.2 million of whom were affected by the quake - are most at risk.