The dam, which was discovered today, was caused by the continued seismic activity in the region. Geotechnical engineers informed Kaikoura Civil Defence that given the size of the dam and the forecast there was a risk it could breach.
Controller Murray Sinclair said engineers, the police, welfare staff and the rural fire brigade met residents at 2.30pm.
"We've told them about the risk, and asked them to please evacuate immediately," he said.
"If any of them have friends or family to stay with then they can go there, otherwise we are rehoming them to the Recovery Assessment Centre in Kaikoura."
In a statement Civil Defence said the evacuation has been completed.
Sinclair said the residents were upset initially but "the majority were very philosophical by the end of the meeting".
"There are about 35 houses in Goose Bay, but several are holiday homes. We've ended up evacuating 17 people, none of whom need emergency accommodation," he said.
"Of these, the majority are going to a nearby holiday park, a few have gone to Christchurch, one person has gone on a planned trip overseas and two have gone to Kaikoura to stay with friends."
"We're also making contact with all bach owners as well. Tomorrow morning we have staff calling all the evacuated residents to give them the latest information we have."
A Civil Defence spokeswoman said they are encouraging people to stay in accommodation south of Goose Bay, but would still support people who would prefer to move north.
Temporary accommodation is currently being organised, and will be provided free of charge for residents.
"We are asking people to steer clear of coming to Kaikoura because we're under the pump here," she said.
"When you've got to go, you've got to go"
Goose Bay resident John Mahony told the Herald having to evacuate was a "pain in the neck".
"But you've got to do what you've got to do, when you've got to go you've got to go."
He was told at the meeting that fears the dam will flood their homes has meant they have to leave.
"Basically we were told that we have to go because this thing might burst."
Residents are frustrated at having to leave, Mahony said.
"A lot of us live 100m up the hill from the creek, and we're a bit pissed off we can't stay but hey, we'll go."
He said they've been given no definite time-frame for when they will be able to return home.
"They don't know, they've got no idea really. It could be a couple of days, could be a couple of weeks, whenever.
"We're just sitting around a bit and answering the phone because that's going flat out, and packing up a bit."
He was planning on taking "just a few clothes, that's all you need really, and a toothbrush".
Mahony plans on staying with mates nearby.
"We're just going 500m around the corner to a friend's place, so we're not going far. And there's a few people who are going to camp at the harbour a few kilometres up the coast."
Looting fears after evacuation
Goose Bay bach owner Cushla Twist, speaking from her home in Christchurch, said she was annoyed that the evacuation of the seaside community between Oaro and Kaikoura had been publicised because looters might now be attracted there with the knowledge the houses were empty.
"We've asked for a 24-hour manned road-block coming into Goose Bay."
She said the some of the evacuees were staying with friends in the vicinity and others had gone to a nearby camping area.
Twist fears that the stream-fed, community-owned water supply, already harmed by the earthquakes, could be further damaged if there is a sudden breach of the landslip dam upstream of Goose Bay that led to the evacuation.
The Ministry for Primary Industries will be relocating paua at Goose Bay.
MPI will work with volunteers and iwi to inspect the paua beds and discuss how best to look after them.
