There are now 98 confirmed victims of Tuesday's 6.3 magnitude quake with at least 92 in a temporary morgue set up by police in Christchurch.
Mr Key told Prime News the death toll had gone up since earlier today and is likely to rise further.
"This is an earthquake that has really shaken Canterbury to its core."
Hopes of finding survivors in the rubble of quake-ravaged Christchurch are fading as the second day following the devastating quake draws to a close.
The list of missing stands at 226.
No one has been rescued the rubble of the ruined city since yesterday.
Canterbury District Commander Superintendent Dave Cliff said the focus remained on finding survivors and the most damaged parts of the city had been divided into grids where search and rescue personnel were working.
Rescue workers were using a "process involving sniffer dogs, acoustic testing - looking for any sound - along with cameras which are used to place within the rubble itself to look for any sign of life", Mr Cliff said.
"If we find a body but we can't recover it quickly, we will carry on. This is very much an operation around rescue, it's looking for the living," he said.
Of the missing, police were working to separate those who were likely trapped under buildings and those who were likely just out of town.
"It remains a rescue operation however we are satisfied for reasons as explained yesterday that at the CTV (Canterbury TV) site there is no chance of survival," he said.
There was also no chance of survivors at the Christ Church Cathedral buildings and police estimated between 16 and 22 people were killed by falling rubble there.
Up to 122 people in the CTV building were believed to be missing or unaccounted for, including more than 80 students and staff from King's Education Ltd, housed in the CTV building.
The figure had been updated from this morning when 90 students and staff were said to be missing or unaccounted for.
Of those missing, nine were staff, 10 were from the Toyama Study Group from Japan, nine were "new Monday starters" and 54 were "other students", according to the college's website.
Fifteen CTV staff and four Filipino nurses were also believed missing in the wreckage.
Rescue work at the site was halted by safety concerns as the nearby Hotel Grand Chancellor, one of the city's tallest buildings, threatened to collapse.
Hopes were also dashed earlier after investigations concluded reports of signs of life at the collapsed Holy Cross Chapel in the CBD were unfounded.
The Fire Service also ruled out the possibility that someone else was alive buried under rubble in Gloucester Street.
Prime Minister John Key today said an "enormous recovery job" lay ahead and the Government was working on a financial package for those affected by the quake.
Mr Key reallocated some ministerial portfolios to free up Canterbury Earthquake Recovery Minister Gerry Brownlee to focus on the fallout from the quake.
And Social Development Minister Paula Bennett confirmed almost 1000 people affected by the quake had received emergency funds.
So far more than $163,000 has been paid out in civil emergency grants, available to anyone in genuine need. The grants are not income tested.
There have been more than 10,000 calls to the Government Helpline 0800 779 997.
Meanwhile up to 200 elderly people in residential care centres homes were being moved out of Christchurch.
A number of aged residential care centres were without water, sewerage and power facilities and many had been taken home with family and friends.
As of this morning, 431 people had gone through the Christchurch Hospital's emergency department and 164 admitted as seriously injured.
The Hotel Grand Chancellor remained standing today, despite a number of aftershocks, including a 4.1 magnitude shake just after midnight.
View Christchurch earthquake: Map of the destruction in a larger map