China has admitted that the Three Gorges Dam has created a range of major problems that need solving quickly.
Top leaders say the project has led to environmental problems and issues involving relocating 1.3m people.
The Three Gorges is the world's largest dam and could have cost up to $40bn. This appears to be the first time that central government leaders have admitted to problems with the project.
The admission came in a statement from top government body, the State Council.
The statement initially praised the scheme's achievements, saying it had helped alleviate flooding, improve navigation and generate electricity.
But it went on: "There are urgent problems that need to be addressed, such as stabilising and improving living conditions for relocated people, protecting the environment, and preventing geological disasters."
China's revolutionary leader Mao Zedong dreamed of building the Three Gorges Dam. Construction started in 1994.
The dam was completed in 2006, with the reservoir reaching its full height last year after submerging 13 cities, 140 towns and 1,350 villages.
Local leaders and campaign groups have for some time complained about problems associated with the project.
At a government-organised conference in 2007, local officials warned of "environmental catastrophe".
One problem appears to have been caused by fluctuations in the water level of the vast reservoir, which stretches for 660km (360 miles). This causes frequent landslides.
The government said more also needs to be done to help those forced to move because of the construction.
They need more jobs, better transport facilities and improved social security benefits, said the State Council, chaired by Premier Wen Jiabao.
The Three Gorges was a contentious scheme even before it was approved.
A third of the members sitting in China's normally compliant parliament voted against the plan or abstained.
Perhaps in a tacit acknowledgement of the problems, there were no major celebrations when the reservoir reached its full height last year.
In this latest statement, the State Council said it knew about some of the problems even before work started 17 years ago.
It says others arose while the dam was being built and some have happened since, because of "new demands as the social and economical situation developed".
The task now was to begin sorting out some of these problems, said the government.