MANILA (AFP) - A fire raced through a crowded slum in the Philippine capital on New Year's Day, killing at least two people and gutting hundreds of shanties, officials said.

The blaze, believed to have been caused by firecrackers during New Year revelry, erupted in a warren of makeshift structures that housed informal settlers in Quezon City, a suburb of Manila.

Firemen donning yellow helmets struggled to put out huge balls of flames as panicked residents scrambled to save their possessions and pet animals.

"The place is all just narrow alleys, so no fire trucks could reach the source of the blaze. The houses were all made of light materials and as soon as the fire started it spread in all directions," senior fireman Albert Flores told AFP.

Two residents were found dead, with rescue officials searching the area for more possible bodies, Mr Flores said.

Three other people were injured, including a fireman who lost three fingers when a burning gas cylinder exploded near him, he added.

Terrified residents who fled the scene with all that they could salvage congregated at a city basketball court, hoping for aid from local officials.

Media reports said that the fire may have been started by fireworks during New Year celebrations, which result in numerous injuries and fatalities every year.

Fires are all too common in the many shantytowns that dot the Philippine capital where many of the poor are forced to reside.