Rescue workers have recovered three more bodies after a torrent of mud and debris ripped through a Japanese resort town, taking the death toll to seven.

About 2,000 rescuers were deployed in the ravaged part of Atami, where workers and dogs searched carefully inside homes that were destroyed and filled with mud in Saturday's disaster.

A slight rain continued to fall and the risk of further mudslides occasionally disrupted operations.

"We will do the utmost to save as many lives as possible," Atami mayor Sakae Saito said.

Rescue workers found the bodies of two women and a man under the mud on Tuesday, Atami officials said.

By late Tuesday, more than 20 people were still missing, Shizuoka prefecture and Atami city officials said.

Officials are still sorting out the number because many apartments and houses in Atami are second homes or holiday rentals. In addition to the seven found dead, 25 people have been rescued, including three who were injured, officials said.

The disaster is an added challenge for Prime Minister Yoshihide Suga as authorities prepare for the Tokyo Olympics, due to start in less than three weeks.

Japan is still struggling with the coronavirus pandemic, with cases steadily climbing in the capital and experts suggesting a need for another state of emergency.

The landslide occurred after days of heavy rain in Atami, which like many seaside towns in Japan is built into a steep hillside. It tore through the Izusan neighbourhood, known for its hot springs, a shrine and shopping streets.

The town has a registered population of 36,800 and is about 60 miles south west of Tokyo.

Officials on Tuesday started examining the cause of the disaster. Government experts visited a site believed to be the starting point of the mudslide and flew a drone for an aerial survey.

Shizuoka governor Heita Kawakatsu said rain soaked into the mountainside and apparently weakened the ground under a massive pile of soil at a construction site, which then slid down the slope.

The prefecture is investigating planned land development in the area, which was reportedly abandoned after its operator ran into financial problems.

Land and infrastructure minister Kazuyoshi Akaba said he planned to conduct a risk assessment for tens of thousands of land development sites around the country.

The Izusan area is one of 660,000 locations in Japan identified as prone to mudslides by the government, but those designations are not widely publicised and public awareness is low.

Early July, near the end of Japan's rainy season, is often a time of deadly floods and mudslides, and many experts say the rains are worsening due to climate change.

With other parts of the country expecting heavy downpours, authorities are urging people near hillsides in at-risk areas to use caution.

A year ago, flooding and mudslides triggered by heavy rain in Kumamoto and four other prefectures in the Kyushu region of southern Japan killed nearly 80 people.

In July 2018, hillsides in crowded residential areas in Hiroshima collapsed, killing 20, and in 2017, mudslides and flooding in the Kyushu region killed 40.