Thirty corpses, including seven children, have so far been pulled from the landslide that crushed hamlets along a river in Sindhupalchok district before dawn on Saturday following monsoon rains, an official said.
"The death toll has now reached 30, that includes 17 women, four men, seven children and two bodies we have not been able to identify," regional police chief Subodh Ghimire told AFP.
More than 100 police and soldiers, using bulldozers and excavators, were digging through piles of mud and rocks to reach about 135 bodies still thought buried.
"We expect to find many more bodies today as we continue our search of the affected area," said Ghimire from badly-hit Jure village.
The head of Nepal's disaster management division, Yadav Prasad Koirala, told AFP, "we think the final death toll could be around 165 or higher".
The absence of official records has left authorities struggling to determine the exact number of people missing, Koirala said.
Traumatised villagers kept up their anxious vigil at the landslide site, about 120 kilometres (74 miles) northeast of Kathmandu, in the hope their loved ones would be discovered by rescuers.
Kalu Tamang, a 41-year-old cook who lost eight members of his family, including his wife, mother and four children, said he was desperate "to see their faces one last time".
"I want to carry out the last rites for my family members, I am waiting for their bodies," Tamang told AFP.
Many of the men from the disaster-hit villages worked and lived near the Nepal-China border as truck drivers, traders or hotel staff, and were away when the landslide struck.
Ram Bahadur Lama returned from the border to discover his wife was among those killed.
"I don't know how I will spend the rest of my life, I wish I had been buried with her," the 50-year-old told AFP.
- Evacuations in India -
As the grim search continued, India stepped up evacuation of thousands of residents from its eastern state of Bihar, amid fears the landslide would unleash flash floods downstream across the border, inundating villages.
Nepalese workers have been attempting to blast holes in landslide debris which has dammed the Sunkoshi river and created a large lake. The river runs across the border into India's Bihar as the Kosi river.
"We have evacuated more than 65,000 people but more than this number will have to be evacuated soon," Bihar disaster management official Anirudh Kumar told AFP.
The Kosi river burst its banks in 2008 and shifted away from its normal course, engulfing swathes of Bihar and killing hundreds of people.
Scores of people die every year from flooding and landslides during Nepal's monsoon season.
At least 75 people were killed in separate incidents last year, when floods triggered by heavy rains struck homes in Nepal's remote western region and southern plains.
More than 70 people died in May 2012 when an avalanche sparked a flood on the Seti river in the worst natural disaster to strike the Himalayan nation in recent years.
Nepal's landslide came as rescuers said 108 bodies have now been found in western India where a major landslide destroyed a village last Wednesday.
Indian rescuers were struggling to keep up the search for still more victims on Monday in Maharashtra state, with heavy rains making conditions dangerous for the workers, a National Disaster Management Authority spokeswoman told AFP.