LAGOS - The Nigerian Red Cross was searching on Thursday for hundreds of children missing or suspected of being held against their will after a devastating arms depot fire in Lagos which killed more than 600 people.

The organisation has raised the prospect that many of the children might be held in captivity. More than 1,100 people are still missing since fire and explosions from the arms dump triggered a mass panic on Sunday.

Patrick Bawa, a spokesman for the organisation, said many children listed as missing were believed alive but were not being turned over to their families, a development worrying social workers in a country known as a link in a major West African child trafficking network.

"We have found situations that are very abnormal," Bawa said. "There are security officials who have children in their custody and they don't want to release them to us. This is making our job very difficult."

There was no immediate comment from government officials.

"This cannot be good news in a country where child theft and trafficking are common," said a social worker, who asked not to be named.

Aid workers said uncertainty over their fate was adding to the trauma of relatives burying the dead and searching through piles of decomposing bodies in poorly maintained hospital mortuaries as the grim task of identification continued.

Many of the dead drowned in two canals near the armoury as smoke billowed and rockets and shrapnel rained down on stampeding crowds fleeing the disaster in the city of more than 10 million people.

"The city will take a long time to come to terms with this," said a Nigerian Red Cross official.

Bawa said witnesses had reported over 1,000 children at the Oduduwa police station in Ikeja district on Sunday night but Red Cross workers who arrived the next morning were told they had gone.

"When we went there in the morning, police in Oduduwa said the children were there, but had left," he said.

The independent Vanguard newspaper said 172 people, mostly women and children, who sheltered in a Roman Catholic mission on Sunday night had been forcibly removed by armed soldiers on Monday.

"People who are holding children should please take them to the Red Cross," Bawa said, declining to speculate on why they would be held.

As the search for bodies stuck in the murky, sludge-ridden canals continued, the families of those already found began burying the decomposing remains of their loved ones on Wednesday in heart-wrenching rituals in desolate cemeteries.

A Reuters Television crew followed Bless Mkponu who brought the body of his 17-year-old brother in a creaking yellow bush taxi. The swollen body protruding from a make-shift open coffin was lowered into a shallow grave and covered with a white sheet.

It was not clear why authorities delayed earlier plans to move the bodies to mass graves by Wednesday.

The absence of a government rescue operation at the Pako canal has angered hundreds of relatives and sympathisers who have paid amateur divers to continue searching for bodies believed to be stuck in the murk.

"You cannot do anything meaningful here until the weed is cleared," said one rescuer, who gave his name as Mallam, as he tried to clear some of the undergrowth.

President Olusegun Obasanjo, who has faced fierce criticism over the location of the armoury in a crowded district and over government handling of the tragedy, on Wednesday ordered a review of arms storage by the military.

(Additional reporting by Tume Ahemba) Nampa-Reuters