Before the disaster struck, the Maldives were the picture-postcard tropical paradise many well-heeled people dreamed about, with coconut palms leaning over crystal-clear lagoons and coral reefs promising great snorkelling and diving.

Now a state of emergency has been declared, throwing the classic desert islands into crisis after they were deluged by the freak waves that crippled large swathes of Asia.

While the tourist industry has been shaken to its core, local residents are also hurting from the tragedy triggered by an undersea earthquake on Sunday off the Indonesian coast.

"I will never go back to Dhiffushi," vowed Fazleen, 14, who lost not only his home, but the island he was brought up in which will have to be rebuilt from scratch.

The tiny low-lying coral atoll is now "uninhabitable" and he must look for another, this time with higher ground and drinking water.

"There may be more waves. I feel safer here in Male," he said pointing to the higher ground and a Japanese-built break water around the capital, a luxury that does not exist in many of the 202 inhabited islands in the Maldives.

Most of them, including the tourist resorts, have been devastated.

"There is no life here. There are no homes or buildings standing on Guraidhoo, in South Male atoll," said Ahmed Abdulla, a reporter who travelled to one of the hardest-hit islands in the archipelago.

"Everybody is crying," he said.

Ahmed said there was a stench of rotting fish at Guraidhoo and the vegetation had been destroyed by sea water.

The few residents left on the island told him: "Please let the world know of our fate."

They said two waves struck the island.

The first one was only about four feet high and when it went away, the lagoon emptied as a second wave readied for attack. By then women and children had climbed trees to escape the knockout punch that swept over roof tops.

Finding high ground for safety in the Maldives is no easy task, with the cluster of 1,192 coral islands highly vulnerable to any rise in sea levels.

Knowing they will stand little chance if water levels jump, the country has been a major campaigner on the issue of global warming fearing melting polar ice caps could spell disaster.

But the feared horror hit in another form, with the tidal waves washing away infrastructure.

Scattered some 800 kilometres (500 miles) across the equator, officials said 9,000 island people were homeless with at least 2,000 houses destroyed.

Fleeing to Male was no guarantee of safety, with two thirds of the capital submerged under about four feet (1.2 meters) of water at the height of Sunday's terror.

A man who was opposite the commercial harbour area in Male said he saw the sea suddenly swell and even before he could run towards the centre of the island he saw boats coming towards him.

"Suddenly, there was water up to my neck," he said. "I saw a woman and a child nearby, but I don't know what happened to them."

With foreign tourists fleeing in droves, many vowing never to return, the government is facing its worst ever crisis.

Spokesperson Ahmed Shaheed said the economic damage was estimated at more than 1.3 billion dollars, or twice the tiny Indian Ocean nation's gross domestic product.

He said the main immediate problem was with transport and communications.

"Relief aid efforts have been hampered by this," Shaheed said.

Two Indian air force aircraft carrying food and water have arrived in Male and were helping with the relief effort and three Indian navy ships have also been dispatched, the Indian diplomatic mission here said.

The Maldives had been scheduled to parliamentary elections on Friday, but they have been delayed until January 22.

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