KOLONTAR, Hungary — Hungary raced against time on Sunday to erect a dam around a ruptured reservoir and divert a new wave of toxic sludge that threatens to overwhelm already devastated villages.

As hundreds of volunteers joined engineers rushing to erect the 600-metre dam, a top official said it was only a matter of days before the reservoir housing a chemical residue would begin to crumble.

"In two or three days there is going to be rain and we are trying to speed things up so that we can finish off the dam before the rain comes," Zoltan Illes, the state secretary for environmental protection, told reporters at the dam construction site.

"Once the rain is here, the remaining sludge will be washed out and the dam's northern section is going to break away. This is imminent. Once the wall breaks down, the sludge will start flowing again."

Repair work also continued on the reservoir itself where cracks have been detected, raising fears that what is already Hungary's worst environmental disaster could soon get even worse.

At least seven people were killed when the red-coloured sludge first began seeping from the reservoir next to an alumina plant before then cascading into nearby villages and tributaries of the Danube.

Kolontar was the village worst hit by the disaster and its entire population of nearly 1,000 people have been forced to evacuate while the threat of a new spill remains.

Many have been put up in a sports centre in the nearby town of Ajkar although others have moved in with relatives.

Tibor Dobson, the official in charge of the disaster relief effort, said around 800 volunteers were helping 900 police, disaster relief workers and firefighters Sunday.

A team of five experts from the European Union's civil protection unit are heading to Hungary to assess the environmental impact and issue advice on decontamination.

Half a dozen cranes and a similar number of bulldozers were at the site of the dam on Sunday, as part of the effort to build a dam which will eventually be up to five metres in height and six metres in width once completed.

It will stretch from next to the church in the centre of Kolontar and wind up in fields.

Illes said that around 2.5 million tonnes of sludge still remain inside the reservoir after around 800,000 tonnes of sludge spilled out originally.

But he said that the remaining sludge should be easier to deal with if it does spill out.

"This is a different texture now, more like clay and not going to flow as far," he told reporters.

More than 40 people who suffered injuries from the spill were still in hospital Sunday, most treated for burns from the chemicals which also killed livestock and fish.

"They don't have life-threatening injuries, but some will need plastic surgery," said Jeno Racz, director of the Veszprem county hospital.

A three-year-old boy was also transferred to a Budapest hospital because some of the sludge had entered his eyes, causing serious damage, Racz said.

Villagers evacuated to Ajka, 160 kilometres (100 miles) from the capital Budapest, were worried about their homes.

"Unfortunately we will have to stay here for a couple of nights until they build that dam. After that we can hopefully return," said Peter, who like all of those who spent the night at the shelter would only give his first name.

The sludge from the MAL Hungarian Aluminium Production and Trade Company plant is a residue from aluminium production that contains toxic heavy metals such as lead, cadmium, arsenic and chromium.

Prime Minister Viktor Orban, who visited the scene on Saturday, warned that the reservoir was so damaged that a second breach was "likely" and it could release 500,000 cubic metres more of the corrosive mud.

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