A leak in an irrigation dam which prompted evacuations and flood warnings in a southern Queensland town will probably have minimal impact to the area, engineers say.

Key points: The privately-owned dam has a hole in its side, allowing water to escape

The privately-owned dam has a hole in its side, allowing water to escape There had been fears the dam wall would collapse and flood the southern Queensland town of Talgai

There had been fears the dam wall would collapse and flood the southern Queensland town of Talgai Engineers have since assessed the dam and the flood impact is now expected to be minimal

An emergency warning was issued after a 3.5-metre by 1.5-metre hole formed in the side of the 430-megalitre irrigation dam on the Bolzan family farm on Dalrymple Creek near Talgai, about 30 kilometres north of Warwick.

The dam, which was at maximum capacity, was gushing water and the emergency alert was issued for people in parts of Talgai, with flooding expected to occur between Talgai West Road and Dalrymple Creek Road.

Several properties were evacuated and other residents were told to leave for higher ground, with dangerous downstream flooding predicted to hit low-lying areas.

The Southern Downs Regional Council last night warned people in the area to "protect life [and] evacuate now" as the large irrigation dam on the farm was "expected to fail".

Overnight, police door-knocked seven nearby properties and residents were evacuated, with a further five properties door-knocked on Saturday morning and residents self-evacuating.

Southern Downs Mayor Tracey Dobie had said it was feared at least 250 properties might have been affected.

On Saturday morning, the council said in a statement that engineers had assessed the privately owned dam and the impact was now expected to be minimal.

Engineers have assessed the dam and the flood impact is now expected to be minimal. ( Supplied: Southern Downs Regional Council )

It said water levels in the dam had dropped by approximately half a metre in the three hours since daylight Saturday.

The council said engineers found the water was discharging in a controlled rate.

"There is a large paddock below the dam wall in which the water will first impact and this will allow for a broader dispersal should the dam wall fully fail," the council statement said.

The council said residents that might be affected had been directly notified and evacuated.

The red polygon shows the area likely to be flooded if the dam wall fails. ( Supplied: QFES )

'No actual threat'

Rebecca Bolzan told the ABC that her father Joe Bolzan, the owner of the dam, had spotted the hole about 5:00pm on Friday and alerted authorities.

She said the dam was not linked to the quarry but was on the family farm, where they run cattle and grow crops.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 15 seconds 15 s The dam on the Bolzan family property has a hole in it that could cause the whole dam to break.

"It was quite a big hole but [the water] is actually gradually going out, which the engineers are so happy about," Ms Bolzan said.

"It doesn't look like [the dam wall] will let go — the water is coming out slowly and gradually, which is good.

"It's not at that high-risk impact — there's no actual threat of it bursting out like they were thinking."

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John Cowley's property backs onto the dam and he said he was alerted about its potential failure by text message last night.

"It's always a bit scary getting a message like that in the middle of the night, particularly for families that would have been in firing line," he said.

"But we're on high ground so we didn't have to worry too much about it."

Mr Cowley said his property was not impacted by any water.

"We just found out this morning that the dam does have a major problem, but I think the worst of it has probably passed now in terms of the wall collapsing and the big volume of water going downstream," he said.

"It is pretty unbelievable really — it is probably the extended dry period that has caused the problem with the dam for the wall to dry out so much."

Mr Cowley says his property was not impacted by any water. ( ABC News: Curtis Rodda )

Evacuees can't go home yet

Southern Downs Councillor Cameron Gow said engineers were working on a solution.

"The hole in the wall is not huge — it's measured by only a few metres," he said.

"Compared to the size of the storage, which is 430 megalitres, it's not coming out at a rapid rate of knots."

Earlier Saturday an evacuation centre was opened at Warwick Christian College, but at 8:00am the council said the centre had been closed and evacuees should seek shelter with family and friends.

Cr Gow said while the situation had "certainly stabilised" and there was no immediate danger, authorities were taking a cautious approach.

"We won't be allowing evacuees back in until they've advised us the situation is safe," he said.

"If a decision is made for them not to return this evening, they may stay with family and friends, but we're actually looking to get people back to their homes — if this situation resolves itself — sooner rather than later."

Cr Gow also praised the dam's owner for noticing the hole and alerting emergency services immediately.

"He advised emergency services and Queensland police straight away and our engineers, the independent engineers, we've all been working with the private landholder and he's been really good," he said.