Most of the 100,000 people left homeless by the Bam earthquake have now been housed in tents, according to the UN aid team in the Iranian city.
About 100,000 people now need help in the city
The water supply has been restored and a steady stream of humanitarian aid is flowing into the city, UN co-ordinator Jesper Lund said on Wednesday.
Fears of disease epidemics have also failed to materialise, he added.
But Mr Lund warned of the challenge ahead to rebuild the city, where up to 50,000 were killed in Friday's quake.
Aid workers from the US have joined the effort to help the survivors in the first official representation by Americans since Washington cut ties with Iran after the 1979 revolution.
And the US Treasury has announced that banking restrictions on Iran are being eased for 90 days to speed the flow of humanitarian relief.
General licenses that would permit US firms and individuals to transfer funds to Iran will be approved under the temporary relaxation.
Currently it is illegal to transfer funds to Iran because of US sanctions on Tehran, dating back to 1979.
'Iran to rebuild'
Teams from 40 countries are at work in and around Bam where most of the survivors remain close to their homes, some 90% of which were destroyed in the disaster.
There appears little hope of finding anyone alive more than five days after the quake though unconfirmed reports spoke of up to five people being rescued from the rubble as late as Tuesday evening.
BBC reporters who visited the scene of one of the reported rescues found no evidence to confirm local reports that two men and two women had been found alive by the Iranian army.
The Iranian leadership has pledged to rebuild Bam, a 2,000-year-old Silk Route city which was a major tourist attraction, within two years.
Dignity amid horror
The UN's aid co-ordinator said that reconstruction would last "a year or two" and no decision had yet been taken by the Iranian authorities on how to house the survivors more permanently.
Aid agencies say disaster victims need at least:
Shelter: 3.5 square metres
Water: 7 litres/day
Food: 2,100 kilocalories/day
"So far the homeless are staying near to their former houses," Mr Lund told the BBC's World Update programme.
"It has been discussed now how we are going to accommodate them: whether we are going to create camps for them or they are going to stay next to the rubble while their houses are being reconstructed."
The homeless were, he said, receiving shelter, blankets and basic essentials and he commended the Iranian Government's organisation of the relief effort.
The UN official said he was impressed by the dignified behaviour of the survivors in an ancient city largely reduced to dust where mass burials in pits excavated by mechanical diggers have been a daily sight.
"We have not seen any desperate scenes of people throwing themselves in front of the aid trucks trying to get what is on the back of them," he said.
"People have been very orderly and things have been extremely well organised."
Tons of humanitarian aid have been pouring into Iran and there have been pledges of $500m in aid from the international community.
Iranian President Mohammed Khatami welcomed the US participation but stressed that it did not change relations between the two countries who severed ties following the Islamic Revolution of 1979.
"We must not turn down humanitarian assistance... to help human beings who have suffered injury and we do not turn it down but this has nothing to do with the political problems between us," he said on Iranian radio.
An 80-strong US team has started setting up a field hospital - the first to operate since Bam's own two hospitals were flattened in the earthquake.
USAid spokesman Dewy Perks told the BBC it was an honour to be helping the people of Iran on behalf of the US Government. It was "not about politics, it's about humanitarian relief", he said.
Iraq, once a bitter enemy, has also sent a 55-strong medical team and truckloads of emergency supplies have been sent from Kurdish areas of northern Iraq.
Consoling the survivors
The number of dead seems set to rise much higher, but the final figure may never be known as entire families have died and there is no-one left to register them as missing.
"If we consider that, on average, five people lived in each house we can say the death toll will reach 50,000," one Iranian official said.
Iran's health ministry says 14,360 were injured.
Hundreds of Shia clerics from the holy city of Qom in central Iran have set up a camp on the outskirts of Bam, exchanging their traditional black gowns and turbans for all-weather gear.
"There are children and bereaved who must be consoled. That is our job," said one of the clerics, Mohammad Hashemi.
Bodies have been swiftly buried and the authorities are trying to identify hundreds of victims, with often-gruesome photographs being shown to relatives on computers at a mass burial ground outside Bam.