Torrential rains hampered rescue work today in the devastated town of Morvi, where at least 1,000 people were believed to have drowned after a dam burst on Saturday afternoon.

By this evening, police and Army teams had recovered more than 800 bodies, but large areas of Morvi were still cut off by mud and debris.

The Indian newspaper Express estimated that the death toll could reach as high as 5,000. All-India Radio reported that about 1,000 persons were killed. Gujarat State Minister Keshubhai Patel also estimated the death toll at 1,000. Local council leader Ramnikbhai Ehami said the toll could reach 3,000.

Air Force helicopters had been asked to fly over the town and report on the destruction, but rain and high winds prevented them from doing so.

Scheduled air flights into Rajkot, the nearest airport, were canceled today, and telephone communications have been seriously disrupted. The latest weather forecasts predict more rain.

The dam burst came at the end of seven days of torrential monsoon storms. Sources in the area reported that at one point, Morvi had 10 inches of rain in 10 hours.

Outside the town, which is 320 miles north of Bombay, were two dams. The lower one was earth-filled. Preliminary reports say that the upper dam began to overflow, and the volume of water rushing into the lower dam, combined with the battering it had received from the week-long rains, caused an earth-filled flank to collapse.

A wall of water, 20 feet high, surged through Morvi, a town of 60,000 people, destroying about 5,000 houses and leaving a thick layer of mud on the first floors of buildings.

Damage to the industrial section initially was estimated at $10 million.

The Gujarat State government set up a special "relief cell" today to monitor relief operations.

India's new premier, Charan Singh, announced a grant of about $100,000 from the prime minister's relief fund to aid the stricken town.

Singh expressed "deep shock at the enormous loss of precious lives.... I assure you that the government of India will spare no pains to assist the Gujarat government in this hour of trial."

Flood alerts were issued for 16 other cities and towns in Gujarat, India's westernmost state, because of overflowing reservoirs. Officials reported that floods killed 42 persons in the states of Maharashtra, southeast of Gujarat, and Orissa, in the eastern part of the country, and millions of dollars worth of crops were lost.

In Morvi some people living in lowlying areas below the dam were evacuated but others were engulfed or trapped, the Press Trust of India news Agency reported.Officials said about 10,000 people have been evacuated so far from Morvi.

One tearful young girl said she was searching for her three brothers after seeing them swept away from a roof on which they had taken shelter.

Many survivors initially had to go without food and water, but yesterday the government rushed in 25,000 packets of food with Army help, a government agency reported. Drinking water and milk tankers also have reached Morvi, it said.