Bam (Iran) - The official death toll from the earthquake in southeast Iran rose to 28,000, as President Mohammad Khatami promised to rebuild the devastated city of Bam within two years.

State radio quoted local officials as saying that 28,000 bodies had been recovered from the rubble in Bam and surrounding villages, but they predict that the final toll could top 30,000.

Only 2,000 people have been pulled out alive since the earthquake destroyed the historic city, including its ancient citadel, a world architectural heritage site and a major tourist attraction.

70% of Bam was destroyed in the quake which measured 6.7 on the Richter scale. According to public radio, the Iranian central bank has decided to suspend for a year the repayment of debts owed by residents in the quake-hit region. The bank will also put up around half the cost of building 10,000 new homes in the city, which had a population of some 100,000 living in 15,000 houses before the quake.

The oil-rich Gulf states earmarked 400 million dollars of aid for victims of the earthquake, hours after the United Nations appealed for more money as it began assessing the damage.