The 12-foot long crocodile, weighing around 500 kg, was suspected to have sneaked in from the nearby Sitaguda dam, they said.
Dasarathi Padiami was petrified on seeing the huge reptile in his house and immediately rushed outside along with his wife, the officials said.
He asked his two daughters, who were sleeping in another room, to go to the attic, they said.
Hearing Padiami's cries for help, villagers gathered and broke the asbestos roof to rescue the children. They then captured the crocodile and tied it to a tree, an official said.
The villagers were terrorised to see such a huge crocodile for the first time in their village, he said.
Malkangiri forest range officer Basudev Naik said they have rescued the crocodile and released it in a water body about 60 km away from the village.
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