(Adds governor resignation, writes through)

By Lucy Hornby

BEIJING, Sept 14 (Reuters) - The governor of China's northern province of Shanxi resigned on Sunday as the death toll from a mudslide caused by the collapse of a mine waste reservoir climbed to 254, state media reported.

Meng Xuenong, who governed Shanxi for a mere eight months, was replaced by Wang Jun, the head of the State Administration of Work Safety, who was named acting governor. Meng had previously been mayor of Beijing, but was sacked in 2004 after city officials attempted to cover up an outbreak of the deadly SARS respiratory illness.

Heavy rain triggered the disintegration last week of a tailings pond at the Tashan iron mine in Shanxi after it had been overfilled with waste ore, an initial investigation found.

The final death toll from the wall of mud that roared through a market and submerged some buildings to their roofs was expected to climb as more victims are discovered. It could take several more days to dig out areas where villagers believe more bodies are buried, Xinhua said on Sunday.

Fatal mine accidents are common in Shanxi, a poor province rich in coal reserves.

Meng had arrived in Shanxi just over a year ago, as vice party chief and vice governor, after serving as vice director of water diversion, overseeing a controversial project to bring water from southern rivers to China's parched north.

He was promoted to governor in January.

A vice governor of Shanxi, Zhang Jianmin, was also sacked.

China's mines are the world's most dangerous, killing nearly 3,800 people last year, as high demand for raw materials from a booming economy pushes managers to cut corners.

Most victims are coal miners. But strong iron ore demand has also encouraged miners to dig up even low-grade ore, often with little regard for safety or the environment.

On Sunday, an explosion in a coal mine in Luoyang, Henan province, caused the roof of a disused tunnel to collapse, killing seven workers who were clearing the tunnel and trapping others.

Many of the Tashan mudslide victims were apparently migrant workers from southwestern China, making it harder to pin down the number of dead and missing because they have no family in the area.

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