Eight people have been rescued after the Brecon and Monmouthshire canal burst its banks, sending a torrent of mud and water into their homes.
A group of homes were evacuated in Gilwern, near Abergavenny, after the alarm was raised at 0730 BST.
One eyewitness described it as a "terrible scene," with water running down the hill onto a main road.
Firefighters and British Waterways worked to secure the waterway, and all roads in the area were closed.
Three homes have been badly damaged with two families evacuated to Gilwern community centre.
Fire crews from Abergavenny and Brynmawr were called to the scene and a boat was sent from Maindee, Newport.
Derek Latham, landlord of the Corn Exchange Inn in Gilwern, said he had helped a father and his two sons who were searching for his wife and mother-in-law.
They were found an hour later in a nearby field.
"Families have been evacuated to the local community centre in Gilwern," he said. "We believe everyone is safe."
But Mr Latham said part of a farmhouse had been washed away, leaving a "massive hole".
Eyewitness Tony Smith said he saw two children being removed from one of the houses and that the water rose so high it was over the bonnet of his Land Rover.
He said another eyewitness had told him the water had gone in through the back door of one houses and out through the front door.
Landslide after part of the canal burst its bank
Mr Smith also received a phone call from a neighbour to say he had seen a man and a child walking up the road covered in mud.
Engineers from British Waterways have been examining the damage to the 200-year-old canal, and have carried out temporary work to stop the flow of the water.
David Baldacchino from British Waterways said: "The process at the moment is to make sure that the water that is remaining in the canal is fixed, so we've been putting mini dams in to the canal further along, to make sure no more water can escape."
Gwent Police advised motorists to take alternative routes and to use the A40 if possible as the A4077 between Gilwern and Llangattock was closed.
Sergeant Paul Graham of Gwent Police later said: "The road is going to be closed for a considerable time, probably at least a week.
"It'll be probably some days before we can clear the road."