Authorities lifted an evacuation order on Tuesday for nearly 200,000 California residents after declaring that the risk of catastrophic collapse of a damaged spillway for Oroville dam had been significantly reduced.

The Butte County sheriff, Kory Honea, said residents could return home immediately.

State water officials said they had drained enough of the lake behind the dam, the nation’s tallest, so that its earthen emergency spillway will not be needed to handle runoff from an approaching storm.

But, the sheriff said, the region would remain under an evacuation warning, meaning that residents need to be ready to flee again if conditions worsen.

Residents returning home “have to be vigilant”, Honea said, adding that “there is the prospect that we will issue another evacuation order … if the situation changes”.

Crews also dropped giant sandbags, cement blocks and boulders on damaged areas on Tuesday.

Displaced men pick up donated toothbrushes from a relief center after an evacuation was ordered for communities downstream from the dam. Photograph: Beck Diefenbach/Reuters

Officials had ordered residents to flee to higher ground on Sunday after fearing a never-before-used emergency spillway was close to failing and sending a 30ft wall of water into communities downstream.

Over the weekend, the swollen lake spilled down the unpaved emergency spillway for nearly 40 hours, leaving it badly eroded. The problem occurred six days after engineers discovered a growing hole in the dam’s main, concrete spillway.

Officials defended the decision to suddenly call for mass evacuations on Sunday, just a few hours after saying the situation was stable, forcing families to rush to pack up and get out.

“There was a lot of traffic. It was chaos,” said Robert Brabant, an Oroville resident who evacuated with his wife, son, dogs and cats. “It was a lot of accidents. It was like people weren’t paying attention to other people.”

Governor Jerry Brown said on Monday that he sent a letter to the White House requesting direct federal assistance in the emergency, though some federal agencies have been helping already.

