"We are staging this sit-in because the government didn't fulfill the commitment it made in 2006 to build houses for people affected by the dam," Ezzedine Jaafar, their spokesman said by telephone from the town of Al-Damer, around 300 kilometres (200 miles) north of Khartoum.

"In 2007, the water destroyed the houses of these people, and now they live in a bad situation. We tried to communicate with government authorities about this ... But we haven't received any response," he added.

Witnesses said around 1,000 people had joined the sit-it, held close to the main government building in Al-Damer, and that they were surrounded by police. Completed in 2009 at a cost of more than $2 billion, the Chinese-built Merowe dam doubled Sudan's power generation capacity.

But it also displaced 15,000 families, who were ordered to leave their homes three years ago to make way for the dam and the huge reservoir that formed behind it.

Violent protests by villagers opposed to the dam broke out in 2006, in which three people were killed and dozens injured.

Khartoum sits on the confluence of the Blue and White Niles, and the government has aggressively sought to tap the power of its Nile waters -- a valuable resource that could help to offset the loss of southern oil revenues.

Officials say the $400-million project to heighten the Roseires dam in Blue Nile state, near the Ethiopian border, that is due for completion next June will create three million feddans (1.3 million hectares) of farmland.

But experts warn of the social and environmental costs of such projects, with the raising of the Roseires dam expected to lead to the dislocation of another 22,000 families.