The landslide hit Cox's Bazar overnight, killing five people as army troops and paramilitary were called in for rescue operations.
Fire service officials and witnesses said incessant monsoon rains caused the avalanche which crushed four houses in the foothills under huge chunks of earth killing the five including two children.
"Army troops and BGB personnel have joined us in the rescue operations as at least one person still remained trapped under tonnes of mud," a fire service official said.
Two people were retrieved from under the chunks of mud and they were being treated at a hospital, he said.
Last week, a landslide had claimed six lives in the port city of Chittagong in the same region prompting authorities to intensify an eviction campaign to remove poor people living in shanties in the hilly area.
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