Residents of a Paraguayan village that risks being submerged in floodwater were defying authorities' calls to evacuate on Thursday as a nearby dike threatened to burst, officials said.

The Paraguay River bordering Argentina has broken its banks at various points in recent rainstorms, forcing 130,000 people from their homes.

But in the southeastern village of Alberdi, many of the 10,000 locals were hunkering down rather than shipping out.

Floodwater has transformed the village into an island.

"The dike is leaking. Water is gushing out of it and our experts say there is a big risk that it will burst open like a tsunami," the country's emergencies minister Joaquin Roa told AFP.

"There is a wall of water heading south. We cannot wait any longer. We have to evacuate."

Experts say the tropical extreme weather phenomenon known as El Nino and unseasonably hard rain are to blame for widespread flooding in South America in recent weeks.

Floods have displaced 170,000 people overall in Paraguay, neighboring Brazil and Argentina, and Uruguay, officials say. At least 12 people have been killed by flooding in Paraguay, Brazil and Argentina.

Despite the risks, Alberdi's mayor, Federico Centurion, said about 50 families were not heeding his calls for them to evacuate.

"We are in the hands of God and the Virgin."

- Fearing a flood 'tragedy' -

Instead of fleeing, residents were piling up sandbags to protect their homes.

"The inhabitants of Alberdi do not want to believe that the dike can collapse," Centurion said.

"The speed of the water is striking. Added to that are the waves caused by big container boats that are constantly passing along the river. All of that is putting pressure on the dike."

One resident, shopkeeper Gabriela Gonzalez, reckoned however that "the authorities are exaggerating."

Disembarking from a boat in Alberdi with bags of merchandise, she said the water will not burst through the dike.

One of the soldiers helping evacuate villagers, Lieutenant Colonel Catalino Benitez, said they were meeting resistance among locals.

"They tell us, 'What happened in such-and-such a year was worse. That is their consolation," he said.

"They don't even like us to be here, although we have come to help."

Among those who did heed the warnings was Juana Vargas, who agreed to flee with her family across the river to the Argentine city of Formosa.

"We have not had a good Christmas," she told AFP.

"We have children. They are playing in the mud. There are mosquitoes. It's not safe to drink the water so they are getting sick," she said.

"I'm afraid there'll be a flood in the night while we are sleeping."

Roa said that if the river kept rising, he would "be obliged to apply to state prosecutors to order the use of force" to evacuate residents.

"If the dike breaks during the night, there will be a tragedy."

El Nino strikes every few years, associated with a sustained period of warming in the central and eastern tropical Pacific.

Last month, the UN's World Meteorological Organization warned the current El Nino was the worst in more than 15 years, and one of the strongest since 1950.