The accident happened at a dam in southeastern Attapeu province late Monday, releasing five billion cubic metres of water - more than two million Olympic swimming pools.
The report added that there were "several human lives claimed, and several hundreds of people missing," Laos News Agency said.
Officials have brought boats to help evacuate people in San Sai district of the province as water levels rise after the dam collapsed, ABC Laos news reported.
Several houses in the southern part of the district were also swept away, the report said, and officials in the province put out a call for relief aid for flood victims.
A video posted by the news network on its Facebook page showed villagers stopping to watch fast-flowing water from the side of a river bank.
Environmental rights groups have for years raised concerns about Laos' hydropower ambitions, including worries over the impact of dams on the Mekong River, its flora and fauna and the rural communities and local economies that depend on it.
Several dams are being built or are planned in Laos, an impoverished and landlocked communist country that exports most of its hydropower energy to neighbouring countries like Thailand.
The US$1.2 billion dam is part of a project by Vientiane-based Xe Pian Xe Namnoy Power Company, or PNPC, a joint venture formed in 2012.
Among the companies involved in the project according to the Laos News Agency are Thailand's Ratchaburi Electricity Generating Holding, South Korea's Korea Western Power and the state-run Lao Holding State Enterprise.
The 410 megawatt capacity dam was supposed to start commercial operations by 2019, according to the venture's website.
The project planned to export 90 per cent of its electricity to energy hungry Thailand and the remaining amount was to be offered up on the local grid.
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