Workers are racing to build an emergency dam in western Hungary on Sunday as cracks in a reservoir widen, threatening to unleash a second torrent of toxic sludge on the village of Kolontar and nearby rivers.

About one million cubic metres of the waste material leaked out of the alumina plant reservoir into villages and waterways earlier this week, killing seven people, injuring 123 and fouling rivers including a local branch of the Danube.

Kolontar was evacuated yesterday after cracks appeared in the northern wall of the reservoir.

News agency MTI cited environment state secretary Zoltan Illes as saying a 25-metre crack in the weakened wall had widened slightly by this morning.

Tibor Dobson, spokesman for disaster crews at the scene, said workers had laid the groundwork of a new dam in Kolontar to ward off any fresh flood of the sludge, which tore through neighbouring areas last Monday, toppling cars and wreaking havoc in houses.

Dobson said the number of people evacuated from Kolontar, which lies closest to the reservoir, had increased to about 1,000 overnight.

Prime minister Viktor Orban has said the torrent of sludge is the worst ecological catastrophe Hungary has suffered.

The nearby town of Devecser, home to 5,400 people, remained on alert. The military has sent 319 soldiers and 127 transport vehicles into the town and five trains are ready in case it has to be evacuated.

Dobson said 400-500 people had decided to leave the town voluntarily and at this stage an evacuation was unlikely. Orban will inform parliament about the findings of an investigation tomorrow and promised "the toughest possible consequences" to ensure such a disaster does not recur.

The interior ministry said on its website that samples taken early today showed that alkalinity levels in smaller rivers affected by Monday's spill, and in the Danube, had returned to normal.