Water is being pumped out of the Toddbrook Reservoir in a desperate bid to relieve pressure on the already-crumbling dam wall.
Around 400 homes in the lower valley area Whaley Bridge were evacuated on Thursday after a 'severe flood warning' was issued.
Those affected have been told to stay with family or friends, with others seeking shelter at nearby Chapel High School.
A large-scale emergency response was sparked after a section of the dam wall collapsed following heavy rainfall and flooding.
Video footage taken just 24 hours earlier shows tens of thousands of gallons of water crashing over the wall into the River Goyt below.
It is understood this caused damage to the structure of the reservoir. There were fears the dam could burst completely.
As it stands, engineers are still assessing the stability of the structure. Police are warning people to stay away from the area.
Trains have also been cancelled between Hazel Grove and Buxton until 'it is safe' for services to run.
Water is being removed from the reservoir and being pumped into the River Goyt below to relieve pressure on the wall.
The levels of the River Goyt are already high because of the heavy rain and water from the reservoir.
Lee Rawlinson, area director at the Environment Agency, told the Manchester Evening News : "We don't issue severe flood warnings lightly but you can imagine the volume of water that sits behind that reservoir, if there was to be a catastrophic failure then that would have a huge significant affect for those living downstream."
The Canal and River Trust, which owns the reservoir, has also issued a statement.
It read: "Following the heavy rainfall which has caused widespread problems across the North West, we’re currently working with local agencies to manage the potential risks arising from damage to the spillway at Toddbrook Reservoir which feeds the Peak Forest Canal.
"Our engineers are on site assessing the scale of the damage and over the next few hours we will be doing all we can to draw down water from the reservoir in a controlled way to reduce the risk to surrounding communities.
"In the meantime the emergency services are taking every precaution including evacuating local properties and closing local roads to maintain public safety."
