"We're still pulling out people alive, but many, many have died," said one medical worker.
At a second school in Dujiangyan, fewer than 100 of 420 students survived, Xinhua reported.
The initial tremor, which the U.S. Geological Survey upgraded to magnitude 7.9 from 7.8, was followed by a series of aftershocks, which shook the area through the night.
"Some are still very strong," said a Dujiangyan resident. "We have put up tents outside to sleep in."
A group of about 15 British tourists were out of reach near the epicentre, likely in Wolong, Xinhua reported. China said that there had been no reports of foreign casualties as of midday (0400 GMT).
"TIME IS LIFE"
China's benchmark stock index traded down after the quake, which forced suspension of trading in the shares of 66 companies.
However, analysts said they did not expect a major economic impact from the disaster though it could mean supply shortages that fuel inflation, already at a near 12-year high.
China's Communist Party leadership announced that coping with the devastating quake and ensuring that it did not threaten social stability were now the government's priorities.
But bloggers swapped information and opinions on the quake, from whether it could have been predicted to the quality of construction - and the reason for the high number of deaths of schoolchildren.
The Health Ministry issued an urgent appeal for blood and the Ministry of Railways imposed a state of emergency for trains linking Sichuan with other provinces.
"Time is life," said an official announcement from the Communist Party Standing Committee.
The Sichuan quake was the worst to hit China since the 1976 Tangshan tremor in north-eastern China where up to 300,000 died. Then, unlike now, the Communist Party kept a tight lid on information about the extent of the disaster.
Neighbouring areas were also affected, with 189 reported dead in the north-western province of Gansu, 92 in Shaanxi province and school collapses in the municipality of Chongqing.
In Gansu, the quake caused a train to derail, spilling petrol tanks and sparking a fire, Xinhua reported. In Sichuan's Shifang, where the quake sparked a major leak of liquid ammonia, about 600 people died and as many as 2,300 remained buried, Xinhua said.
In Chengdu, many residents slept outside or in cars as aftershocks shook the city. On Tuesday, most shops were shuttered and authorities were evacuating hotels and big buildings.
"At this time of disaster, we are one family," local radio said. "We are confident that under the leadership of the Party, families can be reunited and we can leave this nightmare."
