Peru is facing fears of a tourism decline after heavy rains forced the evacuation of thousands of tourists stranded at Machu Picchu and cut access to the ancient Inca city high in the Andean mountains.

The 15th century city perched around 2500 meters above sea level is the most visited site in Latin America, a pillar of the Cusco region and the source of 90 percent of Peru's tourist revenues, according to the country's finance ministry.

But the historic ruins have been virtually cut from the outside world after storms damaged the railway most visitors use to arrive there.

The fabled city can also be reached via a four-day hike along the Inca Trail.

The railway track was reportedly damaged in hundreds of places by flooding and landslides prompted by heavy rains that hit the country in recent weeks. Authorities expect it will take two months to complete repairs.

The Tourism Observatory has warned Peru stands to lose up to 0.64 percent of GDP if tourism declines, with particularly serious repercussions for Cusco, where some 175 000 people make a living in the tourism industry.

The government quickly launched a campaign to deal with the destruction wrought by the severe weather.

It is offering assistance to more than 35 000 Peruvians affected by the storms, and prioritizing repairs of the Machu Picchu railway system, which carried some 2220 tourists a day before the heavy rains and mudslides.

"We're studying emergency measures to keep it open for international tourism," Cusco Association of Tourism Agencies president Marco Ochoa told AFP.

The "only immediate option" for accessing the site is by helicopter from Cusco, he added.

The disaster has dealt a massive blow to Peru's tourism industry, after the sector began 2010 projecting a 10 percent rise in visitors from last year, when the country welcomed 1.7 million tourists.

"Where would tourism in Peru be without Machu Picchu?" asked Gestion, a financial daily.

Bartolome Campana, director of the National Chamber of Tourism, admitted that "we're dependent on it," adding that the country's tourism industry needs to diversify in both the short and long term.

Tourism operators report receiving hundreds of cancellations in the wake of the severe weather, and tour companies are offering 50 percent discounts on trips to Peru.

The Andean country could be "a touristic power in the 30-40 years to come," but only if it diversifies its tourism industry, said Jose Marsano, a researcher at the Observatory.

Experts also warn that Peru should do more to protect Machu Picchu.

The small village of Aguas Calientes, the gateway to Machu Picchu and home to some 8000 people, was overwhelmed by floodwaters from the Vilcanota River despite years of warnings from scientists and specialists that its chaotic development posed risks.

"The lack of precautions, of security, show that local governments need to relearn how to govern, to manage, after centuries of central government," said Marsano. That requires far more than just repairs to the local railway.