The Iraqi government on Wednesday rejected the findings of a U.S. oversight panel that a dam near the northern city of Mosul is on the verge of a collapse that could cause flooding along the Tigris River "all the way to Baghdad."

The dam, Iraq's largest, has several problems, including that it was built in the 1980s in an area with sinkholes.

Twenty-one contracts have been awarded, totaling $27 million for repair and reinforcement efforts.

But the latest quarterly report from Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, found the U.S. effort "has yet to yield significant improvements."

More ominously, the Oct. 29 report included a letter from the top two U.S. military and civilian officials in Iraq that warned "a catastrophic failure of Mosul Dam would result in flooding along the Tigris River all the way to Baghdad."

The May 3 letter by U.S. Ambassador Ryan Crocker and the top military commander in Iraq, Gen. David Petraeus, warned the flooding would hit particularly hard in Mosul, a city of 1.7 million people about 30 miles downstream.

It referred to a 2006 U.S. Army Corps of Engineers review that found the probability of the dam's failing to be "exceptionally high."

That review called the Mosul Dam "the most dangerous dam in the world" because of erosion problems.

Iraqi government spokesman Ali al-Dabbagh rejected this conclusion.

"The Mosul Dam is in good condition and it is not in danger," he said in a statement. "This dam is under constant observation by the Iraqi government and all precautionary measures and needed maintenance are being taken."

He said teams of specialists and experts were "working around the clock" to strengthen the dam by bolstering areas suffering from erosion with cement.

"The reports of any possible collapse for the dam are inaccurate and are untrue," al-Dabbagh said.

The dam was completed in 1984 atop soluble soils that erode with exposure to water, leaving cavities beneath the structure. The Iraqi government has worked to shore up the foundation since the 1980s.

But the latest U.S. report found that the dam does not appear to meet "international standards for risk and reliability," even with the U.S. investment as part of reconstruction efforts after the 2003 fall of Saddam Hussein.

The U.S. officials urged the Iraqi government to make improvements a priority, recommending that officials maintain lower-than-normal reservoir levels and develop evacuation plans in case the dam breaks.

(This version CORRECTS a quotation from the Iraqi government spokesman, who said reports that the dam is near collapse are inaccurate.)