Planes dropped water on smouldering forest fires in Greece yesterday and the European Union promised a huge aid effort to help the recovery from the inferno which has been burning for more than a week.

Firefighters tackled two main fire fronts remaining of a nationwide emergency that has killed 63 people and made thousands homeless.

Pre-fabricated homes were being delivered at the pace of 40 a day, often up winding mountain paths to help house those whose homes had been razed.

The government has paid out more than €70 million to more than 20,000 victims whose properties were destroyed. The Finance Ministry has said the fires will cost the economy at least €1.2 billion but Greek media have estimated the bill at something like €4 billion.

The EU official in charge of a €1 billion relief fund promised to come to the rescue after viewing the scorched valleys of the southern Peloponnese peninsula from a helicopter.

"If the damage is worth, as you write in the newspapers, €4 million, and I hope it will be a lot lower, that will mean €200 million from the solidarity fund," EU Regional Policy Commissioner Danuta Huebner told reporters after meeting Prime Minister Costas Karamanlis in Athens.

EU Commission President José Manuel Barroso, who has called the fires a "European disaster", flew to Greece yesterday to hold talks with the government.

Just two weeks ahead of a parliamentary election, Mr Karamanlis has come under severe criticism for his conservative government's handling of Greece's worst fires in memory and voters will closely watch his management of the relief effort.

Peloponnese, where large areas of once lush countryside has been turned into blackened earth dotted with bare black tree stumps, life was slowly returning to something like normal.

Roads were re-opened and electricity was restored to most of the 425 villages which had been cut off.

The national weather service predicted a mini-heatwave in the Athens region today but also the prospect of rains in some parts of the country, reducing the risk of new flare-ups."

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