At least 400,000 squatters blocking key drainage channels of a giant lake on the edge of the Philippine capital need to be uprooted to fix Manila's flooding crisis, a government official said Thursday.

The squatters are among one million people living on the shoreline of Laguna de Bay, which will stay flooded for up to five months unless drastic action is taken, Laguna Lake Development Authority chief Edgardo Manda told AFP.

"I have made a strong recommendation to remove these people from the danger zones and not allow them to go back," Manda said of the 400,000 squatters who are living mostly on what was once marshy wetlands.

"The authorities would probably need to erect barricades and station sentries in these areas."

The dramatic recommendation comes as large parts of eastern Manila remain flooded 12 days after Tropical Storm Ketsana dumped the heaviest rains in more than four decades on the city, killing at least 298 people.

Manda and other officials have acknowledged that chaotic urban planning, or no planning at all, exacerbated the crisis, particularly around Laguna, where shantytowns, factories and housing developments have overtaken farms.

However, Manda said he realised removing squatters from around the lake would be a "political decision" that may not sit well with politicians so close to national elections in May next year.

In those polls, local officials as well as a new president are chosen.

About 300,000 of the squatters are living in and around an illegal open garbage dump on wetlands that block two connecting rivers that are meant to channel excess water from the lake into Manila Bay to the west.

"The channel is constricted," Manda said, adding that clearing the squatters and garbage from the wetlands was key to allowing water to flow more freely.

About 100,000 other squatters live in houses on stilts on the lakeshore to the south, he added.

Aside from the one million people living near the immediate shoreline, which is likely to remain flooded for many months, at least one million others live in adjacent districts of eastern Manila that are also still under water.

President Gloria Arroyo's chief aide, Eduardo Ermita, on Wednesday announced a Belgian firm had been hired to dredge the Pasig river.

"Definitely this will help," Ermita said, but he did not address the issue of the squatters directly.

He also said the government was reviewing the process of granting permits to developers of residential areas along the 220-kilometre (137-mile) stretch of Laguna shoreline that were now partly submerged.

"These things must be looked into because we can see the effects," he told reporters.

Aside from working out a way to unplug the Laguna lake area, the government has been trying to care for more than 315,000 homeless flood survivors who remain in schools, sports arenas and other makeshift evacuation centres.

The government has warned that disease outbreaks are highly likely for those living in the shelters, as well as in the flooded areas around Laguna, because of unsanitary conditions.