The blaze, which started in woodland near the city on Saturday and whose cause is under investigation, destroyed 500 homes and forced the evacuation of more than 5,000.
"So far, there are at least 11 fatalities from the fire," police official Colonel Fernando Bywaters told Radio Cooperativa.
The latest death toll came as President Michelle Bachelet arrived in the hard-hit city, 120 kilometres west of the capital Santiago, to coordinate the emergency response after declaring it a disaster zone.
The military has taken over security in the popular tourist hub, located on the Pacific coast with a population of 270,000.
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At dawn, pockets of fire were still active and firefighters warned that extinguishing them was complicated by the area's hilly geography, narrow streets and persistent strong winds.
Overnight, many residents watched helpless, from distant vantage points, as the hills burned bright red. Thick smoke clouded the sky.
Hundreds of firemen were hopelessly outmatched in their battle to limit the blaze. They were forced to retreat time and again as flames reduced homes to cinders, a wall of red towering above them.
More than 200 inmates at a women's prison were evacuated due to "large amounts of smoke produced by the fire," said Tulio Arce, regional prison guard director.