Rescuers battled near freezing temperatures to try and save anyone buried alive under the rubble of buildings in Bam, the historic town in southeast Iran devastated by an earthquake.

Most of the residents were sleeping when the quake struck early Friday, destroying the ancient Silk Road city and killing, according to government officials, more than 20,000.

Tens of thousands were reported injured in the town, about 975km southeast of capital Tehran.

Bam Governor Ali Shafiee told state television, "The city must be built from scratch."

For many of the survivors it was a tough battle. In the absence of water, electricity and gas, they spent Friday night in the streets in temperatures below 0 degree Celsius.

CNN quoted the UN Office for Coordination of Humanitarian Affairs as saying that as much as 80 per cent of Bam was destroyed, including both of the town's hospitals, forcing people to seek medical attention in the provincial capital, Kerman, about 160km northwest.

President Mohammad Khatami described the quake as a "national tragedy" and said it was too huge for Iran to cope with alone.