The 63-ton Piary disappeared in the Sulu Sea off the southern coast of Palawan island on Sunday after large waves smashed a hole in the vessel's hull, the coastguard said.

Its last distress call informed the shore that the vessel was about to sink and that its 68 passengers as well as the crew had donned life jackets, said the coastguard district commander Captain Godofredo Mandal.

A coastguard spokesman told AFP vessels of that size would normally have at least 10 crew.

Anxious relatives swamped the coastguard station in nearby Brooke's Point. The ferry had come from the Cagayan de Sulu island group east of Palawan.

Naval reconnaissance aircraft failed to locate the vessel or any survivors, while navy and coastguard vessels battled huge waves stirred up by seasonal northeasterly winds that have brought torrential rain across the southern half of the country.

The ferry's disappearance cast a new pall over the Christmas season in the predominantly Catholic country which is still digging out bodies from landslides in the central islands that destroyed entire villages late Friday.

Rescue workers pulled out 102 more bodies from the mud and debris on Panaon island over the past 24 hours, said regional police chief Dionisio Coloma.

The confirmed deaths from the island accounted for 170 of the 191 bodies recovered so far. Nearly 100,000 people have been displaced across the disaster areas and dozens more are missing, raising the likely death toll from the mudslides to more than 200.

Coastguard chief Rear Admiral Arthur Gosingan ordered small inter-island vessels, the only form of transport for many islands in the country, to remain at port until the monsoon winds eased.

Nearly a week of heavy rain unleashed landslides and floods on the islands of Leyte, Panaon and Bohol as well as the northeast section of Mindanao, the country's second largest island.

"Massive disaster operations are ongoing and I would like to thank the US government for lending a hand in the delivery of assistance and the search for the missing," said President Gloria Arroyo. Washington has offered all-weather rescue helicopters.

Defense Secretary Eduardo Ermita said Monday that Panaon residents had given up hope of recovering relatives and neighbors still believed buried in several landslides.

"The stench is overpowering several days later, and the families of the missing in San Francisco (town) have given permission to the government to cover the rubble instead, converting it into a mass grave," Ermita told DZBB radio.

The weather lifted briefly on Monday, allowing military vessels to deliver food, medicines, and equipment to Tacloban on Leyte island.

From there the supplies were due to be taken by sea to Panaon, home to about 50,000 impoverished farmers. Over the years, they have cleared the interior highlands of forest cover to plant coconut, the Philippines' main agricultural commodity.

"The mountains on Panaon are bereft of trees. We are paying for the illegal felling of trees over the past 10, 20 years," Chief Superintendent Coloma told DXRC radio.

Aerial footage of the island shown on television in Manila showed ochre spots amid green coconut groves where the earth had slid, burying villages on the narrow coastline.

"We have to sustain the environment and at the same time, provide alternative sources of income for the people so that they will be encouraged to plant trees and build forests," said Arroyo.

TERRA.WIRE