Following the burst, the water-level in the lake has decreased by 18 metres, but the water flow in the Sunkoshi river has increased suddenly, scaring people living downstream, said an official at the Nepal Army Headquarters.
According to the District Police office, Sindhupalchok, an exacavator of Nepal Army, 10 motorbikes and a house have been swept away following the outburst.
The increased flow of water has also caused damage to Sanima Hydro Power plant.
Army officials said the dam for Lamosanghu Hydropower project is at a high risk of being swept away.
Authorities have asked people living downstream to stay alert. Large number of security personnel have been deployed around the affected site.
The artificial lake was formed following a massive landslide in Juru village of Sindhupalchok district on August 2 which blocked the natural stream of the Sunkosi river.
As many as 156 persons were killed and scores went missing in the landslide that washed away the entire Jure village, 100 km east of Kathmandu near Tibet border.
The lake had also blocked the Araniko Highway, which connects Kathmandu and Tibet.
Officials said it would take a few more days to resume transport services in the region.
A bailey bridge will be constructed along the Araniko Highway and an alternative road is being built to resume transportation.
With the decline in water-level, the submerged houses and sunken section of Arniko highway have begun appearing.
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