The crush occurred on the island of Koh Pich following a traditional boat race along the Tonle Sap river on Monday evening.
Speaking in a live television broadcast, Hun Sen, the prime minister, said the incident was one of the country's worst disasters ever.
"This is the biggest tragedy since the Pol Pot regime," he said, referring to the leader of the brutal regime that ruled the country between 1975 and 1979 and left up to a quarter of the population dead.
Hun Sen declared Thursday would be a national day of mourning, and ordered all government ministries to fly the flag at half-mast.
So Cheata, a soft drink vendor, said the trouble began when 10 people fell unconscious in the crush of the crowd. She said that caused a panic, which then turned into a stampede. Many people were trampled.
Part of the crowd pushed onto a bridge, which also jammed up, with people falling under others and off the bridge. So Cheata said hundreds of hurt people were left lying on the ground afterwards.
Cause not clear
Many of the victims drowned, suffocated or were trampled as they tried to escape.
Authorities had estimated that more than two million people could descend on the capital, Phnom Penh, for the three-day water festival. Koh Pich is in the middle of Phnom Penh.
Yin Soeum, a local journalist, told Al Jazeera the cause of the incident was not clear.
"I heard a rumour that there was a group of people moving towards a bridge that collapsed," he said.
"But another rumour says there was a group of gangsters that got into a fight in the middle of a crowd of people, which made everyone panic and run around."
Om Yentieng, the prime minister's special adviser, denied reports that the victims were electrocuted by lighting cables and that the panic was sparked by a mass food poisoning.
Calmette Hospital, the capital's main medical facility, was filled to capacity with bodies as well as patients, some of whom had to be treated in hallways.
'Children just died'
"I was taken by shock. I thought I would die on the spot. Those who were strong enough escaped, but women and children died," Chea Srey Lak, a 27-year-old woman who was knocked over by the panicked crowd on the bridge, said.
She managed to escape but described a woman, about 60 years old, lying next to her who was trampled to death by hundreds of fleeing feet.
"There were cries and calls for help from everywhere, but nobody could help each other. Everyone just ran," she said at Calmette Hospital, where she was being treated for leg and hand injuries.
Many of the injured appeared to be badly hurt, raising the prospect that the death toll could rise as local hospitals became overwhelmed.
"This is the biggest tragedy we have ever seen," said Sok Sambath, governor of Daun Penh district.
Cambodia is one of the region's poorer countries, and has an underdeveloped health system, with hospitals barely able to cope with daily medical demands.
The prime minister e said that the government would pay the families of each dead victim the equivalent of $1,250 for funeral expenses and provide $250) for each injured person.
Source: Al Jazeera and agencies