Key Points:

The torrent of water and mud which burst out of the hot crater lake atop Mt Ruapehu on the North Island's volcanic plateau today could have been far worse, say authorities.

A seven-metre high soft rock and ash dam that had penned the lake since the mountain erupted violently in 1995 finally gave way late this morning.

The escaping water gouged out rocks and earth and other debris carrying them down the mountain in the classic mudflow know as a lahar.

There were no reports of injuries.

Some officials said this afternoon they believed the 85 metres- wide dam, on the southeast summit of Ruapehu, had not collapsed entirely and that the water had pulsed out of the breach rather than in one giant explosive flow.

That minimised any possible danger to life and property.

Today's lahar had been expected to occur this month or next because the lake has been rising steadily for several years and the dam had been leaking increasing quantities of water as the lake ate away its foundations.

Today's lahar was described as "moderate" and did no damage to major bridges and roads, electricity pylons or property.

The lahar was contained as had been expected in the Whangaehu River which flows parallel to the Desert Road section of State Highway 1 before bending south to cross SH49 at Tangiwai.

It was at Tangiwai on Christmas Eve 1953 that a major lahar, roaring down the slopes of the mountain, washed out the railway bridge, plunging the overnight Express train from Wellington to Auckland into a maelstrom of water, mud and rocks.

One hundred and fifty-tree people lost their lives in New Zealand's worst rail disaster.

State Highway 49 is still closed, waiting on two bridge inspections, although State Highway 1 has reopened, Ruapehu District Council said.

The lahar went past the village of Tangiwai and was on its way to the sea.

Ruapehu District Council spokesman Paul Wheatcroft said the lahar had not caused any infrastructural damage which they knew of and was losing strength the further it went.

The lahar was following the route of the Whangaehu River and had passed the Marae Bridge and was now following the river's path through farmland, he said.

"It will go all the way to the sea, near Wanganui, but it will be negligible how much of it will be left by then."

The lahar had followed the river's path which ran parallel to the Desert Road but had not crossed the road, he said.

The river's water levels were much higher because of the lahar but were contained, he said.

The lahar broke through a rubble wall atop the mountain's crater lake about 10.47am today, triggering an alarm, Horizon Regional Council said.

Police and Civil Defence workers immediately closed roads round the southern base of the mountain including the North Island's main north-south State Highway 1.

Hundreds of motorists were stranded in the region after the Desert Road was closed. They were being urged to return home or find alternative routes.

Conservation Department senior officer Dave Wakelin said it was a "moderate lahar" with no settlements in the immediate path of the flow.

A naturally occurring 7m wall of volcanic ash and sand known as tephra sits atop the mountain, holding in millions of gallons of acidic water, and this is believed to have been breached, regional council chairman Gary Murfitt said.

"It is on its way down...and the good thing is that rivers in that area are not affected by flooding, so it will only be the lahar going down," he said.

In the 1953 lahar, the bodies of some of the dead were washed high into trees as the torrent spewed down river valleys to the sea, some 200km) away. Many of the victims were never found.

More than 60 lahars have been recorded in the Whangaehu Valley below the mountain since the 1860s.

Ruapehu District Council mayor Sue Morris said the lahar was not a worst case scenario as the crater wall had not given away completely.

"There has been a channel which has pushed through the dam and the waters running down the Whangaehu River.

"From the reports I've heard so far it's pretty well under control, it's all on but it's not a huge full-dam break at this stage."

All residents near the lahar path have pagers and would be contacted if there was a full collapse, she said.

All farmers in the vicinity of the river should move stock to higher ground.

Conservation Minister Chris Carter this afternoon praised all the agencies involved in the managing of the lahar.

"I am pleased that we now have a robust system in place to manage this kind of natural event and to do so with a great degree of advance warning, with the least amount of damage to people and property is the ideal situation."

The management system for the lahar was the international best practise for this type of natural event, he said.