(Adds latest death toll, Modi quote, details on signal failure)
By Jatindra Dash and Abinaya V
BAHANAGA, India, June 3 (Reuters) - At least 288 people have died in India's worst rail crash in over two decades, officials said on Saturday, after a passenger train went off the tracks and hit another one in an accident a preliminary report blamed on signal failure.
One train in Friday's accident also hit a freight train parked nearby in the district of Balasore in Odisha state in the east of the country, leaving a tangled mess of smashed rail cars and injuring 803.
The death toll has reached 288, said K. S. Anand, chief public relations officer of the South Eastern Railway.
Dead bodies are still trapped in the mangled coaches and the rescue operation is continuing, a Reuters witness said, while the death toll is expected to rise.
A preliminary report indicates that the accident was the result of signal failure, Anand said.
"The Coromandel Express was supposed to travel on the main line, but a signal was given for the loop line instead, and the train rammed into a goods train already parked over there. Its coaches then fell onto the tracks on either side, also derailing the Howrah Superfast Express," he said.
Surviving passenger Anubha Das said he would never forget the scene. "Families crushed away, limbless bodies and a bloodbath on the tracks," he said.
Video footage showed derailed train coaches and damaged tracks, with rescue teams searching the mangled carriages to pull the survivors out and rush them to hospital.
Dead bodies were lying on the bloodstained floor of a school used as a makeshift morgue, and police helped relatives identify the bodies, covered with white cloths and placed inside chained bags.
Prime Minister Narendra Modi arrived at the scene, talked to rescue workers and inspected the wreckage. He also met the survivors at hospitals.
"(I) took stock of the situation at the site of the tragedy in Odisha. Words can't capture my deep sorrow. We stand committed to providing all possible assistance to those affected," Modi said.
A witness involved in rescue operations said the screams and cries of the injured and the relatives of those killed were chilling. "It was horrific and heart-wrenching," he said.
Families of the dead will receive 1 million rupees ($12,000), while the seriously injured will get 200,000 rupees, with 50,000 rupees for minor injuries, Railway Minister Ashwini Vaishnaw said. Some state governments have also announced compensation.
"It's a big, tragic accident," Vaishnaw told reporters after inspecting the accident site. "Our complete focus is on the rescue and relief operation, and we are trying to ensure that those injured get the best possible treatment."