Some 3,000 firefighters, helped by 400 soldiers and dozens of aircraft, struggled to contain more than 70 forest fires raging across Portugal.
The fires, stoked by strong winds and record temperatures that have soared above 104 degrees Fahrenheit, have been blamed for the deaths of nine people over the past week.
The Forest Service estimated that about 133,400 acres of forest have burned since July 28, but they had no damage figures.
``We are facing an exceptional situation,'' Prime Minister Jose Durao Barroso said after an emergency meeting of his Cabinet.
``It's been brought about by absolutely exceptional weather conditions, so we have to respond with exceptional measures,'' he told reporters.
The government said the $124 million in aid would be used to compensate people for lost jobs, homes, crops and livestock as well as to help local councils rebuild infrastructure.
The wildfires were mostly in the central region of Portugal near Castelo Branco, a hilly area covered in dense pine forests about 120 miles northeast of Lisbon.
After weeks without rain and amid a heat wave, fire has raced through the forests, often forcing fire crews back as they battled to save remote villages in the fire's path.
Television pictures showed terrified local people choking on smoke as they fled from their homes.
The government has been criticized for its handling of the crisis, including accusations that officials failed to act swiftly and failed to ensure fire crews had adequate equipment.
Dozens of houses and businesses burned down in remote villages, many of which were without water, electricity and telephones.
Rail services were canceled and roads were cut off in some regions.
Spain, Italy and Morocco sent firefighting aircraft to help the Portuguese.
Three forest fires, meanwhile, burned Monday in central and southern Spain, which also was suffering from a heat wave.
Some 200 people were evacuated in the central province of Avila, and the blaze spread northwest to Salamanca province. Some 12,355 acres of pasture land have burned so far and two rail lines were cut off in the Extremadura.
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