Some 350 people left their village in the northern district of Segamat on Sunday after smelling the gas coming from the dumpsite.

District officer Mohamad Alwee Abdul Rashid said that a team experienced with dealing with hazardous materials had been dispatched to the area and an operations room established to monitor air quality.

"It's illegal dumping so we will take action against those who are involved," he said, adding that the situation was now "safe".

Mohamad Alwee said no one had been hospitalised, although the Star daily reported Monday that villagers suffered eye, skin and throat irritation, as well as vomiting and breathing difficulties.

"We are now opening our operations room to monitor the quality every hour in case the air conditions worsen. If, then we will evacuate people," he said, adding that about 1,000 villagers were still remaining.

Officials said initial investigations showed the toxic gas was released after heavy rains in the flood-affected district mixed with dumped by-products of aluminium production.

"According to the investigation, the waste is called aluminium dross. That will produce ammonia when added with water," said Mohamad Alwee.

The illegal dumping of industrial waste is not uncommon in Malaysia. In December, 50 drums of toxic waste were found near a golf course in a suburb in Kuala Lumpur's outskirts.