More troops are being drafted in to help the rescue effort
Taiwan's president says the number of people killed in mudslides and floods caused by a typhoon could exceed 500, almost 400 of them in a single village.
Hsiaolin was hit by a massive mudslide that covered all but two houses - and officials say they have given up hope of finding any of those missing alive.
The official death toll has already climbed to 118 but is set to go higher.
The military hopes on Friday to airlift out the nearly 2,000 people who remain stranded in the surrounding area.
Last weekend's typhoon caused Taiwan's worst flooding for 50 years.
In central and southern Taiwan, roads have been washed out, bridges swept away and low-rise buildings sent crashing into rivers. Many mountain villages can only be accessed by air now.
AT THE SCENE
Cindy Sui BBC News, Hsiaolin
Having seen Hsiaolin with my own eyes, I finally understand the magnitude of what happened. It looks like a river bed with nothing on it - the houses are all gone and a 17m bridge that was there can't be seen any more.
Nearly 400 people are buried under a 20-30m deep avalanche of mud.
The authorities don't know where to begin - if they start digging through the mud, it's not stable ground so it could cost lives.
The mud is so deep that even if the rescue crews had been here in time, they wouldn't have been able to dig through.
Hundreds had been feared dead in the wake of Typhoon Morakot, but the government had not previously given an estimated total figure for those killed.
Speaking at a national security meeting on Friday, President Ma Ying-jeou said that with the deaths already confirmed "and some 380 people feared buried by mudslides in Hsiaolin village, Taiwan's death toll could rise to more than 500".
Over the past few days, thousands of people have been airlifted to safety from the settlements cut off by the mudslides and flooding, some 2,000 on Thursday alone.
The BBC's Cindy Sui, in Kaohsiung county, says the authorities are confident they can bring out the remaining 1,900 people thought to be stranded in the area on Friday.
The military has enough helicopters now, she says, and the weather has improved. Troops are being sent on foot into some steep valleys that are hard to search from the air, she adds.
Many of the worst-affected villages are inhabited by aborigines, who farm the mountainous terrain.
Thousands more people are believed to be stranded in remote settlements elsewhere in southern and central Taiwan.
Help on way?
Taiwan's government says it has received offers of help from the international community, including the European Union and the US.
But it has stressed the need for very specific technical assistance - namely giant cargo helicopters that can carry large earth diggers and other machinery into remote mountain areas to help re-open roads.
The government has also requested prefabricated buildings to help house those left homeless by the flooding and supplies of disinfectant, to try to prevent the spread of disease.
The families of those stranded and of the hundreds feared dead have urged the government to speed up rescue efforts.
Many have been waiting for days at the rescue operation centre in Qishan for news of relatives missing since the typhoon struck.
Critics say the authorities were too slow to realise the magnitude of the disaster. Some of those stranded say they have received no help for days and are short of food and water.
The government says it is doing everything it can and that rescue efforts earlier in the week were hampered by bad weather and limited access to the affected areas.
More than 14,000 people have been evacuated by air. Others have been carried to safety over ravines where bridges have collapsed by soldiers using makeshift ziplines.
Military helicopters have been dropping provisions for those still stranded, but poor weather earlier this week hampered their work.
The flooding has destroyed 34 bridges and severed 253 sections of road in Taiwan, Reuters news agency quotes the transportation ministry as saying, with repairs likely to take up to three years in the worst-affected areas.
Officials in the island's south-eastern Taitung county estimated that nearly 3,700 people remained cut off as of Friday morning, the AFP news agency reports, while in central Chiayi county some 9,000 were thought to be stranded.
Typhoon Morakot, which lashed Taiwan with at least 200cm (80in) of rain last weekend, has caused at least $910m (£550m) in damages to agriculture and infrastructure, Reuters reports.
Reconstruction is expected to cost some $3.65bn (£2.2bn).
TAIWAN'S WORST-AFFECTED AREAS
Qishan - rescue operation centre established here, thousands of troops drafted in to help.
Liukuei - 200 people awaiting rescue from hot spring resort as of Thursday, with another 700 survivors in the area.
Hsinfa - 32 people reported dead, survivors pulled to safety using ropes thrown across river.
Hsiaolin - hundreds feared dead following mudslides the morning after Taiwan's Father's Day.
Taoyuan - residents told to run to higher ground as embankment holding back lake gave way.
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