China's huge Three Gorges Dam hydro-power project could spark "catastrophe" unless accumulating environmental threats are quickly defused, senior officials and experts have warned, according to state media.

The dam in southwest China, the world's biggest hydro-electric project, has begun generating electricity and has served as a barrier against seasonal flooding threatening lower reaches of the Yangtze River, Xinhua news agency reported late on Tuesday, citing a forum of experts and officials.

But even senior dam officials who have often defended the project as an engineering wonder and ecological boon now warned that areas around the dam were paying a heavy, potentially calamitous environmental cost.

Director of the administrative office in charge of building the dam, Wang Xiaofeng, told the meeting that it was time to face up to the environmental consequences of constructing the massive concrete wall across the country's biggest river.

"We absolutely cannot relax our guard against ecological and environmental security problems sparked by the Three Gorges Project," Wang told the meeting, according to Xinhua.

"We cannot win passing economic prosperity at the cost of the environment."

Wang cited a litany of threats, especially erosion and landslides on steep hills around the dam, conflicts over land shortages and "ecological deterioration caused by irrational development".

The strikingly frank acknowledgement of problems comes weeks before a congress of the ruling Communist Party that is set to consolidate policies giving more attention to environmental worries after decades of unfettered industrial growth.

Wang revealed that Chinese Premier Wen Jiabao used a meeting of the state cabinet earlier this year to discuss the environmental problems surrounding the dam.

Tensions over residents resettled to steep hills where good farmland is scarce had been reduced and water quality in the dam was "generally stable", Xinhua said.

But the officials and experts were worried about the landslides threatening densely populated hill country.

"Regular geological disasters are a severe threat to the lives of residents around the dam," the report cited senior engineer Huang Xuebin as telling the meeting.

Huang described landslides into the dam waters making waves dozens of meters high that crashed into surround shores, creating even more damage.