A criminal probe into the toxic sludge disaster in western Hungary has been launched amid fresh concerns that the Danube River could still be at risk.

The problems began Monday when a sludge reservoir burst at a metals plant in Ajka, a town located about 160 kilometres southwest of Budapest.

It flowed down roads and through homes, quickly dumping an estimated 1 million cubic metres of toxic waste on Ajka and six other towns in the area.

By Wednesday, the sludge had flowed within 100 kilometres of the Danube -- a 2,850-kilometre-long river that flows through Croatia, Serbia, Romania, Bulgaria, Ukraine and Moldova, as well as into the Black Sea.

While Hungary has not asked for assistance in dealing with the disaster so far, spokesperson Joe Hennon said, the European Union is monitoring the situation and is ready to help.

He said the EU is highly concerned about the threat the sludge poses to Hungary and to its neighbours.

"It's not just dangerous for people in one particular country, but pollution can cross borders," Hennon explained, when speaking to CTV News Channel by telephone from Brussels.

On Wednesday, National Police Chief Jozsef Hatala took over the probe into what caused the disaster. Police spokesperson Monika Benyi said investigators were trying to determine if on-the-job carelessness had been a factor.

Hennon said that under EU law, the owner of the plant could be liable for the damage caused by the disaster.

"The principle underlying all of our legislation is that the polluter pays. So it may be, in the long run, that it is the operator of the plant that has to pay the cost of the clean-up operations."

Late Wednesday, sludge-spattered villagers confronted an official from MAL Rt., the company that owns the plant, outside the mayor's office in Kolontar, demanding that they be compensated for their destroyed homes, land and businesses.

While local officials said 34 homes had been rendered unliveable, residents argued that the entire village has been destroyed because real estate there has no value.

"The whole settlement should be bulldozed into the ground," yelled resident Janos Potza. "There's no point for anyone to go back home."

Jozsef Deak, the company's operations manager, said the company would take responsibility for the damage if it is found responsible for the incident.

On Wednesday, emergency workers were pouring plaster into the Marcal River, attempting to bind the sludge before it could reach the Danube, about 72 kilometres away.

Reuters correspondent Maron Dunai told CTV News Channel from Kolontar, Hungary on Wednesday that the army has been clearing the village near the tailing pond of the aluminum factory.

Dunai said the first step for the government was to house and feed displaced citizens, and reconnect the village, which was split in two by the sludge. The military was assembling a pontoon bridge to reconnect the two sides.

"They are clearing up the rubble and basically making the place passable. It is nowhere near cleaning the spill up."

At least four people have been killed, three were still missing and 120 were injured, many with burns caused by exposure to the sludge.

Dunai said brief exposure to the sludge can cause discomfort, but it can cause even more serious problems when it comes in contact with skin for a longer period of time.

"We have heard of people trapped in their homes, waist-deep in the sludge for periods of an hour or more and those people were seriously burned by this residue," he said. "It is highly toxic when exposed to the skin for an extended period of time."

Kolontar Mayor Karoly Tily said on Wednesday that he had no reassurances for residents who feared the plant's reservoir could burst again in the future.

Environmental groups say the reservoir has concerned them for years. They have also measured the pH of the sludge and say it is highly alkaline, meaning that it can cause burns similar to bleach or lyme.

"It's incredibly corrosive. It's caustic," said Scott Cardiff, international campaign co-ordinator with Earthworks. "These red sludges produced from the alumina refining are very dangerous for humans and for the ecosystems."

"We expect contamination through the sediment of the waterways, but also contamination with heavy metals, with lead, possibly cadmium," he told CTV News Channel.

"And there's the risk of radioactive contamination with these sludges as well, because they concentrate naturally occurring radioactive elements."

However, Tily said that although chemical analyses of the sludge were ongoing Wednesday, early test results show "there is no radioactivity."

MAL Rt. has said the sludge is not considered hazardous waste under European Union standards.

The EU confirmed the company had a licence to operate and said there was no indication there was anything wrong with the licence.

Cleaning up the sludge may mean scraping off the topsoil of the entire region, which could take a year or more depending on how much farther it spreads.

With a report from CTV's London Bureau Chief Tom Kennedy and files from The Associated Press