A flu pandemic in Ukraine that has triggered a nationwide panic is worsening this weekend with up to 400 deaths already reported.

The arrival of the virus, suspected by the World Health Organisation to be swine flu but possibly a combination of the H1N1 strain and a respiratory illness, has paralysed the country's fragile health system and could even lead to the postponement of the general election which is scheduled for 17 January.

Seven people died and 35,000 new cases were reported on Friday, said the health minister, bringing the total number of people infected to 1.6 million out of a population of 46 million.

The onslaught of the virus has seen all the major political figures eagerly exploiting the outbreak. Prime minister Yulia Tymoshenko announced the arrival of an epidemic on 30 October, when only one case had been reported, and has closed all schools and banned public gatherings – including campaigning political rallies – for the past three weeks.

Her standing in the polls has shot up after frequent TV appearances, urging people to take care and criticising her political foes for inaction. Tymoshenko even went to the airport to greet a shipment of Tamiflu, prompting president Yushchenko to send one of his own representatives. President Viktor Yushchenko, who is still the electoral front runner but facing an ever narrowing gap with Tymoshenko, has been trying to match her by pledging to spend his campaign funds on medical supplies and 20 million face masks.

"This is very dangerous,' said Igor Shkrobanets, chief of the health ministry in the western district of Chernivtsi. "One or another politician will gain from this situation, but the doctors and their patients certainly will not."

He said the level of fear was such that people were calling out ambulances when they felt the first touch of a fever and hospitals were "overloaded".

In such uneasy times, bloggers and conspiracy theorists have whipped up fears by suggesting that bubonic plague, or a new, more lethal strain of the flu, was sweeping Ukraine and that there was a massive cover-up of the numbers of deaths.

"We are seeing reports of bodies lying in the streets," said one. Others claim to have seen reports of doctors mystified by the state of a patient's lungs after death. But with no authoritative medical analysis of the cases available, such amateur diagnosis has run riot.

The isolation of many Ukrainian towns, especially as winter closes in, combined with the lack of public trust in the weak government and the inexperience of many of the new, 24-hour media outlets, was fuelling the rumour-mongering and the scare stories, said one of the staff at the English-language Kyiv Post.

Semon Gluzman, a psychiatrist in the capital, Kiev, told the Washington Post: "What we're seeing is a normal psychological reaction to the complete incompetence of the state authorities. People are scared and they don't know who to trust any more."

The scare has also led to people hoarding surgical masks and flu remedies, which are now almost impossible to find. Even lemons and garlic, homemade cures for flu, are in short supply.

On Thursday the country received humanitarian aid from 13 nations, the WHO and two Ukrainian charities, and is in talks with six more countries about help with the outbreak. Swine flu pandemics are also being reported in Belarus, Moldova, Poland and Hungary.

• This article was amended on Thursday 26 November 2009. An error introduced at the editing stage referred to Viktor Yanukovych as "President" but he is a leading opposition politician and is head of the Party of Regions. The President of Ukraine is Viktor Yushchenko. This has been corrected.