The government declared Jindo, South Jeolla Province, and Ansan, Gyeonggi Province disaster zones on Sunday after the ferry Sewol sank off the southwest coast with hundreds of teenagers aboard.
The ferry carrying over 470 passengers, most of them from the same high school in Ansan, capsized near Jindo last Wednesday.
Prime Minister Chung Hong-won and other Cabinet members made the decision on Sunday afternoon, and President Park Geun-hye approved it.
Disaster zones are entitled to subsidies from the central government for emergency measures, rescue efforts, administrative support for rebuilding, and compensation.
The cost of fuel for fishing boats and ships from the private sector who took part in the rescue efforts and the cost of psychological treatment for the survivors can also be subsidized or covered entirely from central government coffers.