China will relocate 20,000 people living near the Three Gorges Dam by the end of this year and five times that number by 2017 because of landslide risks caused by the world's biggest hydropower project.

State news agency Xinhua said on Wednesday that preparations had started to move a fifth of the residents of Badong County in Hubei province by the end of 2012, with homes already under threat as a result of constant landslides.

It said 550 million yuan ($87.3 million)in funds has already been spent on relocation costs.

Separately, Liu Yuan, an official with the ministry of land and resources, said in a radio interview on Tuesday that another 100,000 people still had to be moved from the region in three to five years because of landslide risks.

Around 1.3 million people were originally displaced to make way for the 185-metre Three Gorges dam completed in 2006 and a reservoir that stretches more than 600 kilometres along the middle reaches of China's Yangtze river and which reached the maximum depth of 175 meters in October 2010.

The costs of the 21-gigawatt (GW) Three Gorges Hydropower Project have spiralled over the years, with total investment reaching 254 billion yuan, according to official figures, more than four times the original estimate.

The Three Gorges Project Construction Commission, which reports to the State Council, China's cabinet, told the official China Energy News this week that an additional 123.8 billion yuan has also been spent on follow-up work at the project.

Hydropower construction has slowed since 2006, with several large-scale projects vetoed because of the soaring costs of handling displaced people and protecting the environment.

But Beijing is now committed to bringing another 140 GW of hydropower capacity on line between 2011 and 2015 in order to meet its renewable energy targets.

($1 = 6.3015 Chinese yuan)

(Reporting by David Stanway; Editing by Ed lane)