A powerful 7.5-magnitude earthquake struck off the Indonesian island of Sulawesi early on Monday, killing two people, toppling hundreds of homes and forcing thousands to flee houses and hotels.

The quake triggered a tsunami warning from US officials for an area within 1000 kilometres of the epicentre but a similar alert by Indonesia was withdrawn shortly after being issued.

Indonesian crisis centre official Rustam Pakaya said a 56-year-old man was killed and 23 people were injured in Kwandang village, Gorontalo province.

In the neighbouring province of Central Sulawesi, governor HB Paliuju said one person had been killed, two injured and hundreds of houses had collapsed.

"The victim was killed by a collapsing wall," he told reporters.

More than 700 houses were flattened in Buol district, 600 kilometres north of Central Sulawesi capital Palu, and another 500 damaged.

Quake cut communications

He said communications with Buol had been cut in the quake and information was sketchy.

"We are still waiting for an updated report from officials there," he said.

The US Geological Survey (USGS) said the earthquake struck 136 kilometres off the coastal town of Gorontalo at a depth of 21 kilometres.

Thousands of people in several villages of Gorontalo province rushed out of their homes and fled to higher ground fearing a tsunami, the state-run Antara news agency reported.

The sea level briefly rose in some areas but there was no killer wave, it added.

The Hawaii-based Pacific Tsunami Warning Center warned that the quake had the potential to spawn a destructive regional tsunami and advised authorities in the region to "take immediate action to evacuate coastal areas."

Powerful aftershocks

The USGS also reported two powerful aftershocks.

An official earlier told AFP that people of Tolitoli, some 250 kilometres away, had also reported collapsed buildings.

"In an earthquake like this I think it's likely there will be victims," Indonesian geological official Sutiono said.

Indonesia was the country worst hit by the earthquake-triggered tsunami in December 2004 that killed more than 200 000 people in 11 nations across Asia, including over 168 000 people in Indonesia's Aceh province alone.

The Indonesian archipelago straddles several continental plates in an area known as the Pacific Ring of Fire, where seismic and volcanic activity is recorded on an almost daily basis.

Monday's quake comes less than a week after Indonesia launched a high-tech tsunami warning system in a bid to prevent a repeat of tragedies like that in 2004.

The 1.4-trillion-rupiah ($130.2-million) system is able to detect an earthquake at sea and predict within five minutes whether it could cause a tsunami.

The system, built with German technology and funding from a number of foreign nations, will eventually include 23 or 24 buoys linked by cables to detectors on the ocean floor.

President Susilo Bambang Yudhoyono said at the launch on Tuesday that Indonesia was "living on the edge."

"Three tectonic plates — the Eurasian, Indo-Australian and Pacific — meet here," Yudhoyono said.

"This kind of disaster can strike at any time."

AFP