The government has declared a state of emergency in three counties, the State Secretariat of Governmental Communications said.

The National Catastrophe Protection Directorate (OKF) said the two children who died were 1 and 3 years old. A 35-year-old man was killed in his car, and a woman was killed in her home, the government said.

Rescue workers are looking for seven people who are missing. They have treated at least 116 casualties, including eight people who were seriously injured. Most have been airlifted by helicopter to hospitals in the capital, Budapest.

The reservoir burst in the town of Kolontar on Monday afternoon, the government said Tuesday.

At least a million cubic meters of red mud have spilled so far, the government said, affecting the villages of Kolontar, Devecser and Somlovasarhely.

The toxic sludge -- a waste product from aluminum production -- could potentially endanger two major rivers, the Danube and the Raba, the government said. It has already reached the river Marcal.

The Environment and Water Management Center has experts working on preventing the sludge from affecting the Danube and Raba, it said.