A decades-old barrier lake formed by a landslide in eastern Taiwan burst on Tuesday as Super Typhoon Ragasa pounded the island with torrential rains, flooding a nearby town and leaving two people dead and 30 others missing, according to firefighters.

Taiwan has since Monday been lashed by the outer rim of Super Typhoon Ragasa, which is now on its way to the Guangdong coast.

In eastern Hualien county, where downpours continued on Tuesday, the barrier lake on the upper Mataian Creek burst around 3.00pm, washing away a bridge and sweeping into Guangfu township.

"In some places, water temporarily rose as high as the second floor of a house and was about (as high as) one floor in the town centre, where the water has been receding," Lee Lung-sheng, of the Hualien County Fire Department, told AFP.

"About 263 people were trapped and moved up to higher ground when the river suddenly rose. They are not in immediate danger, but they are very worried about the high water," he said.

The stranded residents were asked to stay put and wait for the water to recede, he added.

Rescuers from across Taiwan are heading to Guangfu.

Footage released by Taiwan's National Fire Agency showed flooded streets and half-submerged cars as trees were uprooted in the area.

Across the island, more than 7,600 people were evacuated due to Typhoon Ragasa.(Agencies)