This bungalow toppled over a cliff following a series of landslides in Daniel's Harbour, on Newfoundland's Northern Peninsula. (CBC)

A western Newfoundland town that has been struck by a series of landslides over the last three years is likely to be rocked again, possibly by a massive disaster, a new report says.

The most serious landslide at Daniel's Harbour occurred in April 2007, when a bungalow toppled over a crumbling cliff and into the Gulf of St. Lawrence.

The accumulated slides forced officials to evacuate some homes and businesses, and to reroute a regional highway along the Northern Peninsula.

A new study by the Newfoundland and Labrador government points to further erosion and possibly something significant, Mayor Steve Carey said.

According to Carey, the report outlines two hypotheses that describe what could be happening in the area, the first of which suggests the landslides could be caused by natural erosion.

"It just means that it's an event that's been occurring since 1947. With nothing else happening in that area, we are going to involve three or four more homes," he said.

The second hypothesis suggests that the ground is too weak to support its own weight, which could cause a large scale, fast-moving landslide.

"What you're looking at is the possibility of a major to a catastrophic event that could extend to the pond across the road," he said.

"You're involving the main infrastructure: water, sewer lines for the town. But once you get into that area you're also involving 10, 12 more homes."

Carey said the town will start drilling around the area to figure out exactly what is happening with the soil.

Carey expects the federal and provincial governments to help cover the $400,000 price tag of the drilling program.