The local authorities have declared a state of emergency and evacuated more than 2,000 people to schools and community centres.

Fires are also threatening the southern state of Victoria.

Prime Minister John Howard, visiting the capital, said it was the worst fire devastation he had ever seen.

"A man, a veteran of World War II, showed me his charred medals... One lady, clearly traumatised, said she had lost everything," Mr Howard told reporters.

Police found a 37-year-old woman dead at her home in the suburb of Duffy, the second victim in that area, after a man died of smoke inhalation on Saturday.

An 83-year-old woman was killed in the outlying Stromlo area.

Two serious burn victims were flown 350 kilometres (220 miles) north to Sydney, while more than 50 others were treated for burns and smoke inhalation in Canberra.

Police estimate that up to 400 houses have been engulfed by the flames, which have also cut off electricity and gas supplies in some areas.

Tinderbox

"What we experienced today is a once-in-100-years or 200 years experience," said the territory's chief minister Jon Stanhope.

There was just this big curl of flame, it was like a big whirlwind Phil Bates

By Sunday evening, firefighters were planning new defences against the fires, which were expected to gain in force.

Temperatures on Monday were forecast to hit 38 C (100 F) after a relative respite of 31 C on Sunday in the Australian Capital Territory (ACT).

"The whole philosophy is to surround the ACT either with the black that is burned or bulldozer lines," said Mike Castle, director of emergency services, told a news conference.

The latest bushfires are said to be the worst in 50 years.

There are fears the nine separate fires currently ravaging the area could merge to form a giant unstoppable wall of flames.

Mass evacuation

The BBC's Phil Mercer says Canberra is a city under siege.

TALKING POINT

I saw some flames that must have been 100 metres high David, Canberra

In suburbs such as Duffy, fire provided the only light as the flames devastated streets of houses.

Phil Bates had renovated his home to put it up for sale on Sunday. Now it has been destroyed.

"There was just this big curl of flame. It was like a big whirlwind," he said.

"Then big chunks of embers started coming over and I thought: 'It's time to get out of here'."

Drought

Fires have also been raging in Victoria state, where the resort of Mount Hotham was evacuated after flames broke through containment lines.

Whole streets of houses were destroyed

Vast swathes of land in the Snowy Mountains, south-west of Sydney, and the Kosciusko national park have also been destroyed.

New outbreaks have occurred to the north of Sydney, and are being controlled by firefighters.

Wildfires are common during the Australian summer, but a year-long drought has made areas more vulnerable than usual to serious outbreaks.

One official compared the situation to the 1983, when 76 people were killed in South Australia and Victoria.