Crown research institute GNS says the threat posed by a wall of water behind a natural dam on Dart River in the South Island has subsided.
The dam was created on Saturday by a massive landslip at Sandy Bluff, about 40km up the Dart River from Glenorchy which blocked the valley and formed a lake 3km long.
GNS principal scientist Simon Cox visited the landslide and dam on Monday to assess the chances of it suddenly breaching and sending a torrent down onto the nearby settlement of Glenorchy.
Mr Cox says at the moment enough water is flowing over the top of the dam to prevent too much pressure from building up behind it.
He said the landslide has been moving for around 40 years, and is one of the most active in the Southern Alps. But he does not expect the landslide to get bigger, even with heavy rain forecast for Tuesday.