By YUMIKO ONO

SHICHIGAHAMA, Japan—Every Tuesday in this tsunami-ravaged fishing village, the "Yarn Alive" knitting club meets—an accidental support group for a handful of the thousands of elderly Japanese still homeless after disaster swept away their lives nearly a year ago.

"It cheers me up so much that I don't even feel lonely at night, I just feel like knitting some more," says Setsuko Kasuya, 80 years old. She lost her house and her beachfront grocery store to the waves, a year after losing her husband.

In a room decorated with origami cranes, club members knit for hours using yarn donated from Australia, Scotland, Korea and a church in Cuyahoga Falls, Ohio. They swap tips on cable stitches, and on keeping warm in the prefab houses lining the soccer field here that they call home. Few expect to move away any time soon.

Yarn Alive is a microcosm of the difficulties some tsunami victims face in rebounding from the disaster. Many of the 326,000 people still in temporary housing are 65 or older; in some cities, the percentage is above 30%. Typically they have little savings and few job prospects.

The next step in Japan's disaster-recovery effort, relocating victims to permanent homes on higher ground, is plagued by delays. Late last year, the national government said it would buy tsunami-damaged land from victims—helping them to buy property elsewhere. That program is expected to take years. One big challenge: Valuing the damaged land.

Japan has a mixed track record helping elderly disaster victims. In the five years after 1995's Kobe earthquake, some 233 people living alone in temporary housing died, some going undiscovered for days. People can "lose hope in life and withdraw from society," says Hatsumi Kanzaki, a University of Hyogo professor who has worked with evacuees in both Kobe and the more recent disaster.

Learning the lessons of Kobe, the government has set aside money to check on evacuees in temporary housing. It is spending about 5.7 trillion yen ($70 billion) on support for displaced people including extended unemployment benefits and nurses at housing complexes.

Volunteers are also organizing various programs, like Yarn Alive. Many of its 20 members probably never would have met, except for the quake last March. One woman is a farmer, another a retired power-plant clerk; two were hair-salon owners. Only a few lost family members. But all lost their houses, and nearly everything else, when disaster struck.

The town of Shichigahama, or Seven Beaches, is known for dried seaweed delicacies and a coastline so scenic that more than a century ago, an American missionary set up a getaway.

The tsunami wiped out a third of the town, sending boats crashing into houses and destroying seaweed-drying machines that cost a half-million dollars each, killing the local economy. A tenth of the town's 20,000 people live in temporary housing.

Knitting was the idea of Teddy Sawka, a 64-year-old Christian missionary who came to Japan from Ohio some 37 years ago and has lived in Shichigahama for a half-decade. Ms. Sawka's own house survived. She wanted to help evacuees, and knitting is popular in Japan.

Ms. Sawka showed up at the Daiichi Sports Field housing complex with yarn donated by friends in the U.S. Several women started using it to make blankets for people in places more badly damaged.

During a recent knitting session, Ms. Sawka worked the room. "Sugoi!" or "wonderful!" she exclaimed while collecting the week's "homework"—leg warmers to be sold in Tokyo. The earnings (about $2,000 so far) will go toward rebuilding the town.

She held up an orange-and-brown blanket with wave patterns. "This is just like life," she quipped. "It goes up, and then down, and then up again."

Ms. Kasuya, the 80-year-old, is so enthusiastic that she was done in a matter of hours with her homework that week, a scarf. One of the few things salvaged from her tsunami-damaged home was furniture that happened to hold her crochet hooks.

She has become an unofficial coach to beginners. One woman she looks out for is Kaneyo Kato, 83, who was struggling to complete a pink-and-blue "homework" scarf partly because the shaggy yarn made it hard to identify the stitches.

"Why did you pick such fancy yarn?" Ms. Kasuya scolded gently, undoing the scarf. "There, you had two stitches missing."

Later, knitters swapped advice on staying comfortable in the prefab houses. The sliding front door often gets stuck with snow. Keeping bath water warm is a challenge as well.

After a few months of the knitting club, Ms. Sawka said she noticed a change. The women began letting go of their stiff reserve, patting each other on the back and cracking jokes about how they knit so much they were getting blisters on their fingers. To her surprise, about half the knitters started meeting every day.

The Yarn Alive club—"Keito Iki-iki," as Ms. Sawka translates it—isn't entirely without friction. In recent months, yarn-snatching has become a concern. During one recent class, as soon as Ms. Sawka brought a container of yarn into the recreation room, several women swarmed around it, grabbing any bag of yarn they could get their hands on.

"It's a syndrome," Ms. Sawka said, speculating that it might partly reflect the fact that the women have lost so much. "It's not even greed. But that's how it came out." Or it could simply be, Ms. Sawka said, that the women need so much because they are now knitting every day.

To avoid the yarn being snatched, Ms. Sawka recently assigned one knitter to be in charge of the yarn and make it available only at the recreation room where the club meets. That seems to be working.

Like many evacuees, Ms. Kasuya believes her 210-square-foot quarters at Daiichi Sports Field—a soccer field covered with rows of boxlike prefab buildings—will be home for the foreseeable future. She had been counting on her grocery store to support her in her old age, but it was washed away. Her 40-year-old house was uninsured, and her government pension of about $560 a month isn't enough to buy a new one.

At Daiichi Sports Field, the government pays the rent and rooms are parceled out based on the number of people in a family. One person gets a 210-square-foot one-bedroom. Two to four people get a 320-square-foot unit. Families of five or more get a three-bedroom unit.

With different financial backgrounds, there are clear disparities in the evacuees' futures. While the government eventually plans to buy their damaged property—helping them afford new land on higher ground—evacuees will still need to build their own new houses.

They must also pay off any mortgages on their old houses. Only a quarter of Japanese homeowners have quake insurance, and it covers only a fraction of a mortgage. Declaring bankruptcy is an option, but it carries a stigma in Japan and few people have taken that option.

Misao Ono, a 75-year-old farmer recently knitting a black shawl, is one of the few people on track to build a new house. She lost her home to the tsunami but is lucky in one sense: She already owned land on higher ground. "I lived in such a big house before that God must be punishing me now," said Ms. Ono, laughing.

At a nearby table, dominated by widows, 85-year-old Koto Ito was less certain she can afford a new house. Her family is still paying the mortgage on a destroyed home, and the family's income is dwindling. Her daughter lost her barber shop, and her grandson, in his 30s, is the only close family member still employed.

Ms. Ito says life in the makeshift housing is getting tougher. "It was so hot when I came here, and it's so cold now," she says. What she hates the most is having to move her belongings into the kitchen every night to make room to lay out a futon.

Yoko Suenaga, a 69-year-old former hair-salon owner, recently found a small home on higher ground that she can afford, though it needs some work. She is staying at the soccer field until repairs are done, but she feels so guilty about her luck that she has kept it a secret from all but a few.

"Everybody is having such a hard time," she said, while working on a gray hat. "I can't possibly go around saying how happy I am."

As the women knit, occasionally a man wanders through. One regular is Yoshihiro Endo, a 77-year-old retired fisherman. Mr. Endo comes to chat with the knitters and use an electric massage chair in the corner.

"I'm impressed they don't get tired—they do this day after day," said Mr. Endo, a trim man with a dark, weather-beaten face.

He laments that few men come out to socialize, even though there are other programs such as exercising and foot baths that the men are free to join. Elderly women throughout Japan have long been more socially active than men, and the same pattern is playing out here at Daiichi Sports Field.

Mr. Endo said he was having trouble sleeping at night without taking pills, and has been taking more since the tsunami. He rattled off a list of illnesses—back pain, high blood pressure and asthma.

"Asthma, that's what my husband died of," volunteered Ms. Kasuya. He had a sudden attack and passed away in just three hours. "He didn't even say goodbye."

The daughter of a rice farmer, Ms. Kasuya says she spent her entire life keeping busy. As a young girl in the 1940s, she considered herself lucky to attend middle school when other girls had to work at the seaweed plant.

After an arranged marriage, Ms. Kasuya ran a restaurant and grocery by one of the beaches. Her husband processed seaweed and took tourists by boat to a nearby island.

Not everything went as she hoped. None of her three children wanted to take over the family business, and they moved away. Her neighborhood fell into decline. She closed the restaurant 12 years ago and hoped to keep the grocery open as long as she could keep working.

Ms. Kasuya admits she is worried about growing old alone. She yearns to build a sunny house like the one she used to have, adjacent to her grocery store near the beach. "I know that what I really want is not going to happen," she said.

Despite the laments, she said a recent experience warmed her toward the community that has formed on the soccer field. Being a sports fan herself, one day she made the unusual choice of skipping the knitting club to watch a running race—prompting a worried fellow knitter to give her a call.

"When I wasn't there, they called me and said, 'Why aren't you here?'" Ms. Kasuya said. "It feels so good when they say things like that."