Emergency services in Hungary are trying to stop a torrent of toxic red sludge flowing into major waterways, including the River Danube.
A state of emergency has been declared in three western counties after the chemical waste burst from a reservoir at an alumina plant.
Four people are known to have died, with 120 injured. Six more are missing.
At least seven villages and towns are affected including Devecser, where the torrent was 2m (6.5ft) deep.
The flood swept cars from roads and damaged bridges and houses, forcing the evacuation of hundreds of residents.
The sludge - a mixture of water and mining waste containing heavy metals - is considered hazardous, according to Hungary's National Directorate General for Disaster Management (NDGDM).
While the cause of the deaths has not been established officially, it is believed the victims probably drowned.
Some 600,000-700,000 cubic metres (21m-24m cubic feet) of sludge escaped from the plant, 160km (100 miles) from the capital, Budapest.
With 7,000 people affected directly by the disaster, a state of emergency was declared in the county of Veszprem where the spill occurred, and Gyor-Moson-Sopron and Vas, where the sludge appeared to be heading.
At least 390 residents have been relocated and 110 rescued from flooded areas, the NDGDM said.
Nearly 500 police officers and soldiers, including six emergency detection teams, have been deployed. Plaster has been poured into the Marcal river in a bid to bind the sludge and stop further flooding.
Dr Attila Nyikos, of the NDGDM, told the BBC News website that a police investigation had been opened and tests were still being carried out to determine the environmental impact of the leak.
Zoltan Illes, state secretary for the environment ministry, visited Kolontar on Tuesday and described the flood as the worst chemical accident in Hungary's history.
An alert has been declared on both the Marcal and Torna rivers, and Mr Illes said workers were "desperately" trying to stop contamination of the Raba and Danube rivers.
The clean-up operation could take up to 18 months, the minister told the BBC, and would require a "really vast amount of money" that would probably require an application for financial or technical support from the EU.
Tamas Toldi, mayor of Devecser, told MTI news agency that between 80 and 90 people had been taken to hospital with chemical burns.
Dr Nyikos said the victims had probably been drowned by the sludge, which had flowed out with the speed of water.
The sludge triggers an alkaline reaction on the skin but the effect can be neutralised by washing with plenty of fresh water, he said.
Peter Jakabos, a doctor at a hospital in Gyor where several of the injured were taken, said on state TV that some burns could take days to reveal themselves and what might seem like superficial injuries could later cause damage to deeper tissue.
One eyewitness in Devecser, Robert Kis, said his uncle had been taken to Budapest by helicopter after the sludge "burnt him to the bone".
Alumina, a synthetically produced aluminium oxide, is a white or nearly colourless crystalline substance that is used as a starting material for the smelting of aluminium metal.
It also serves as the raw material for a broad range of advanced ceramic products and as an active agent in chemical processing.
Weeks of heavy rain are likely to have played a role in the accident, the BBC's Nick Thorpe reports from Budapest.
The sludge escaped from a reservoir at the Ajkai Timfoldgyar plant in the town of Ajka. Police say they have confiscated documents from the company's headquarters.
MAL Rt, the Hungarian company which owns the plant, earlier said that by EU standards the sludge had not been considered hazardous.
There had been no sign of the impending disaster and the last examination of the reservoir pond on Monday had shown nothing untoward, it added.
It said it believed the company management "could not have noticed the signs of the natural catastrophe nor done anything to prevent it even while carefully respecting technological procedures".
The sludge flooded 19 streets in Devecser and two in Kolontar, where at least three of the four deaths occurred. Five other areas were under threat.
Rescue workers used an axe to cut through the living room door of Mr Kis's house in Devecser, to let the red liquid flow out, the Associated Press news agency reports.
"When I heard the rumble of the flood, all the time I had was to jump out the window and run to higher ground," said his wife, Tunde Erdelyi.
The Hungarian government said it was not seeking any international assistance for the time being.