Heavy rain and snow caused the Sultan lake irrigation reservoir 120km southwest of Kabul to breach at around 0900 local time (0430 GMT). The Ghazni river rose by 1m within half an hour of the breach, sending waters towards the Oari district.
US-led forces stationed in Afghanistan said they had sent military helicopters to help with rescue operations.
Hundreds of shops and houses have been destroyed in Ghazni city, according to reports on Aljazeera.net.
No official information has been reported on casualties as of yet.