MANOKWARI, Indonesia (AFP) - Indonesian troops were delivering aid Thursday to thousands of people left homeless by an earthquake which killed two people and destroyed hundreds of homes, officials said.

Nine villages on Yapen island in the far east of the archipelago were reduced to ruins when the powerful 7.1-magnitude quake rattled the northern coast of Papua province on Wednesday, they said.

"The number of houses damaged by the quake could rise to more than 1,000 as we're checking nine villages which were badly hit," Disaster Management Agency spokesman Priyadi Kardono told AFP.

"The police, military, local government and volunteers are all on site to provide help to the victims."

On nearby Biak island, National Search and Rescue Board spokesman Sumpeno Yuwono said aid was being rushed to the devastated villages on Yapen as fast as possible.

"The people living in the nine quake-affected villages are now isolated and desperately need food and medical assistance," Sumpeno told state-run news agency Antara.

The quake struck off the southeast coast of Yapen just after midday, sparking widespread panic and triggering a tsunami alert which was lifted an hour later.

A church, a power station and government buildings were among the structures destroyed or damaged on Yapen, which has a population of about 70,000.

Thousands of people also fled their homes and workplaces in the West Papua provincial capital of Manokwari about 300 kilometres (180 miles) to the northwest of the epicentre.

Indonesia is dotted with volcanoes and flanked by major fault lines that produce thousands of earthquakes every year.

The 2004 Asian tsunami was triggered by a 9.3-magnitude quake off the coast of Sumatra and killed at least 168,000 people in Indonesia alone.

A 7.6-magnitude quake killed about 1,000 people in the port of Padang, western Sumatra, in September last year.