By Tyra Dempster

CHENGDU, China, May 28 (Reuters) - China has evacuated more than 150,000 people living below a swollen lake formed by this month's devastating earthquake in the mountainous province of Sichuan, state media said on Wednesday.

The Tangjiashan lake was created when landslides caused by the May 12 earthquake blocked the Jianjiang river above the town and county of Beichuan, near the epicentre of China's most destructive earthquake in decades.

The official death toll from the 7.9 magnitude quake was raised on Tuesday to 67,183, and was certain to rise further as 20,790 are listed as missing. The quake injured nearly 362,000 people and new aftershocks toppled 420,000 houses and injured dozens on Tuesday.

Downstream from the lake, residents were evacuated overnight as engineers dug a diversion channel to prevent flooding.

"According to contingency plans, up to 1.3 million people from 33 townships of Mianyang city could be relocated if the lake barrier collapses entirely," the China Daily said in its online edition.

The water level in the lake, one of 35 "quake lakes" formed by the tremor and holding the volume of about 50,000 Olympic-size swimming pools, has kept rising and the giant sluice would not be ready for another week, the China Daily quoted experts as saying.

Immediately below the lake, the river runs in a loop between flattened high- and low-rise buildings, but threatens communities downstream which held evacuation drills on Tuesday.

In Tianlin village, among the first to be flooded if the lake bursts, gongs and loudspeakers directed 680 villagers to rush to surrounding hills within 20 minutes.

"The flood will sweep our village in five or six hours if the dam collapses," the village head was quoted as saying.

The lake water level was 727.09 metres on Tuesday, only 24.21 metres below the lowest part of the unstable landslip barrier, according to the Mianyang City Quake Control and Relief Headquarters.

In the last century, about 5,500 people have been killed by flash floods after barrier lakes burst through dams made by landslides, according to a 2004 paper by geologists at the Chinese Academy of Sciences.

In 1786, the breach of a landslide dam 10 days after a major earthquake killed about 100,000 people in Sichuan.

The region along the faultline is densely packed with dams, raising concerns that if either the quake lakes or the weakened dams burst, the rush of water could cause other dams to fail.

Apart from the threat of flooding disasters, officials are trying to stave off epidemics as the temperature rises and the rainy season approaches.

A massive relief effort, which involves providing food, tents and clothing for millions and the reconstruction of housing and infrastructure, is expected to take up to three years. (Writing by Nick Macfie; Editing by Alex Richardson)

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