Days of torrential rains caused a landslide on Friday morning burying the village of Guinsaugon on the island of Leyte under several metres of mud.
The village, which was almost entirely demolished, was home to between 1800 and 3000 people.
Rescue efforts have been hampered by further heavy rain, high winds and mud up to 10m deep in places.
Edmund Abella, an army captain, said he and about 30 soldiers were wading through waist-deep mud.
"It's very difficult. We're digging by hand. The place is so vast and the mud is so thick when we try to walk, we get stuck in the mud," he said.
He said the troops had just rescued a 43-year-old woman. "She was crying and looking for her three nephews, but they were nowhere to be found."
As darkness put an end to rescue searches on Saturday, there were various estimates on the number of people that had been accounted for or were still missing.
Only 41 bodies had been recovered and 57 survivors found; but according to the Red Cross that figure could swell into the thousands with the majority of villagers unaccounted for.
Nineteen of the survivors were being treated at the nearby Anahawan hospital, including two children.
Torrential rain, high winds and
thick mud hampered rescuers
Richard Gordon, the chairman of the Philippine National Red Cross, said: "There are about 1500 missing, 200 dead. We're hoping for the best, but preparing for the worst."
"We did not find injured people," said Ricky Estela, a crewman on a helicopter that flew to the scene. "Most of them are dead and beneath the mud."
According to the last census, there were 375 houses in Guinsaugon, but no exact figure on the number of residents.
Among those feared buried by the mud are pupils at the local school, with education officials saying about 250 students and teachers were believed to have been there at the time.
One of the survivors, Dario Libatan, who has lost his wife and three children, described the moment the landslide struck.
"It sounded like the mountain exploded, and the whole thing crumbled, I could not see any house standing any more," he said.
The army evacuated people from surrounding villages and Gloria Arroyo, the president, has promised survivors that "help is on the way".
Nearly 3000 people from the nearby area spent the night in municipal buildings in the town of Saint-Bernard.
The US said it had dispatched two warships to the scene and that some of its 6000 soldiers stationed in the Philippines would assist with the aid effort.
The Red Cross, meanwhile, appealed for $1.5 million to help survivors for the next six months.
It said the funds would be used to purchase tents, blankets, cooking utensils, mosquito nets, temporary shelter materials, hygiene articles, water purification tablets and medicines.
Leyte island is a disaster-prone area often hit by monsoons, floods and heavy rain.
The majority of local villagers are
In 2004, a series of typhoons killed 1750 people and injured another 750, while a landslide in Southern Leyte killed up to 200 people in 2003.
Some locals and environmental experts have blamed deforestation for the slides that came after days of rainfall that was five times higher than usual.