A severe drought in Palau is killing marine life at the island nation's popular Jellyfish Lake, researchers say, forcing tourism operators to cancel trips to the unique Pacific destination.

The lake near the capital Koror normally provides a tranquil, otherworldly experience for tourists, mostly from China, who snorkel and float among throngs of non-stinging, golden jellyfish.

But with the tiny nation of 18,000 in the grip of its worst drought on record, scientists last month estimated the jellyfish population had plummeted from eight million to under 600,000.

Boat operators such as Sam's Tours say even that figure is optimistic, putting the numbers at 300,000 and falling.

Sam's no longer runs tours to the lake, normally one of Palau's main attractions, and four out of five operators contacted by AFP last week had adopted a similar policy.

"Many tour companies including ours that have been taking guests to the lake have not seen any jellyfish," Sam's said in a statement to customers.

"We at Sam's Tours have therefore decided to suspend our tours to Jellyfish Lake with immediate effect until further notice."

Palau had 160,000 foreign visitors last year, more than half of them from mainland China, and tourism is the economy's largest earner.

The drought, fuelled by an El Nino weather pattern, has depleted rivers and dams, forcing the government to declare a state of emergency and appeal for overseas aid.

The Coral Reef Research Foundation said the lack of rainwater had increased salinity in the lake, killing off the plankton that sustain the jellyfish.

"The golden jelly population could be on the verge of crashing, to the point where there are no more medusae (adults) swimming around the lake," the foundation said.

It said juvenile polyps could usually go dormant and repopulate when conditions improved but current conditions on the lake were unprecedented.

"This time around the situation is uncertain, as no one knows how this El Nino/La Nina scenario is going to play out," it added.

The Koror state government said it was confident that eventually Jellyfish Lake would once again live up to its name.

"This is a phase in the natural cycle of events in the overall realm of the ecosystem," it said.

"Similar events in the past show evidence of the resilience of our natural environment to recover to normal conditions."