The Kali Gandaki River in Myagdi district, about 140km north-west of the capital, Kathmandu, has created a deep and growing new lake after the landslide overnight.
Nepal Police in their twitter account said that the water level in the artificial dam, created after the blockage of the river, has risen by 150 metres.
There are no reports of casualties. Authorities have deployed army in the area.
"A landslide based dam has been formed at Kaligandaki river approximately 10 km upstream of Beni Bazar. Residents living downstream in Galeshwor Bazaar and Beni Bazaar need to be in high alert," a warning in the Ministry's website said.
Also Read
Flood forecasting division of Department of Hydrology and Meteorology has appealed to the residents of settlements in the seven districts below the landslide location to stay alert.
The landslide also buried 25 houses in Baisari.
Nawa Raj Sharma, CPM-UML lawmaker from Myagdi, said that the continuous falling of debris is making it difficult for the rescue team to siphon off the water from the artificial lake. The chopper which flew into the district with rescue team was not able to locate the exact spot where the river was blocked as its view was blocked by the dust from the falling debris.
Chief District Officer of Nawalparasi, Hari Prasad Mainali, said all 36 doors of the Gandak canal were opened in view of possible burst of the blocked river.
Kali Gandaki flows in central Nepal and northern India. It is formed by the union of the Kali and Trisuli rivers. It flows southwest into India and then turns southeast along the Uttar Pradesh-Bihar state border and across the Indo-Gangetic Plain as Gandak.
A number of landslides have hit Nepal since the 7.9- magnitude earthquake on April 25 which killed nearly 9,000 people and injured thousands more. It was followed by a 7.3- magnitude quake on May 12 and around 260 aftershocks.