By Alistair Scrutton
ISLAMABAD (Reuters) - The World Bank will release $900 million (574 million pounds) to help fund relief efforts for Pakistan's flood disaster as international agencies warned millions of people were at risk from disease.
The United Nations has warned that up to 3.5 million children could be in danger of contracting deadly diseases carried through contaminated water and insects in a crisis that has disrupted the lives of at least a tenth of Pakistan's 170 million people.
Up to 1,600 people have been killed and two million made homeless in Pakistan's worst floods in decades.
Hundreds of villages across Pakistan, one of the poorest countries in Asia, have been marooned, highways have been cut in half and thousands of homeless people have been forced to set up tarpaulin tents along the side of roads.
The World Bank funds will come through the reprogramming of planned projects and reallocation of undisbursed funds, but it did not say how it would be utilised to aid flood victims.
"We are reprioritising to make the funds immediately available," said Mariam Altaf, a spokesman for the World Bank.
Public anger has grown in two weeks of floods, highlighting potential political troubles for an unpopular government as aid failed to keep pace with the rising river waters.
On Monday, some Pakistani flood victims blocked a highway to demand government help as aid agencies warned relief was too slow to arrive for millions without clean water, food and homes.
The damage caused by the floods and the cost of recovery could bring long-term economic pain to Pakistan and shave more than one percentage point off economic growth, analysts say.
Pakistani stocks ended down 2.9 percent on Monday on fears the impact may be more damaging than first estimated.
Pakistan's High Commissioner to Britain, Wajid Shamsul Hasan, told Reuters the cost of rebuilding could be more than $10 (6.38 pounds) to $15 billion (9 billion pounds).
He appealed to the international community to provide funds for relief and reconstruction for a country fighting Islamist militants, or risk potentially destabilising the whole region.
The government has been under fire for its perceived inadequate response. Islamic charities, some linked to militant groups, have stepped in to provide aid to flood victims, possibly gaining supporters at the expense of the state.
Pakistan Foreign Minister Shah Mehmood Qureshi expressed concerns over Pakistan's stability, saying it was dangerous to let the Islamists fill the vacuum.
"If a person is hungry, if a person is thirsty and you provide water, he'll not ask whether you are a moderate or an extremist," Qureshi told the British Broadcasting Corporation.
"He'll grab water from you and save himself and his children who were starved. So you have to be aware of this challenge."
Only a quarter of the $459 million (292 million pounds) aid needed for initial relief has arrived, according to the United Nations. That contrasts with the United States giving at least $1 billion (638 million pounds) in military aid last year to its regional ally to battle militants.
The U.N. has reported the first case of cholera. In a statement issued in New York, it said the greatest threat was from acute watery diarrhoea and dysentery, but that hepatitis A and E and typhoid fever were also significant risks.
Victims are relying mostly on the military, the most powerful institution in Pakistan, and foreign aid agencies for help.
Nevertheless, a military coup is considered unlikely. The army's priority is fighting Taliban insurgents, and seizing power during a disaster would make no sense, analysts say.
(Additional reporting by Sahar Ahmed in Karachi ; Writing by Alistair Scrutton; Editing by Zeeshan Haider and Miral Fahmy)
