As massive floods in Nepal poses the first major challenge to the Maoist-led government, newly elected Prime Minister Prachanda on Thursday blamed the Koshi agreement for the crisis terming it a "historic blunder".

"Koshi agreement was a historic blunder," Prachanda said during his visit to the flood-hit area in Sunsari district where more than 50,000 people have been displaced and at least 5,000 houses submerged following a breach in the western Kushaha embankment along the Saptakoshi river.

The Koshi pact was signed between Nepal and India 50 years ago during the tenure of first elected Nepalese Prime Minister B P Koirala, elder brother of Nepali Congress leader and former premier G P Koirala.

"People are suffering due to this agreement," the prime minister said in a sentimental mood talking to the flood victims in Sunsari, according to Kantipur daily.

He said the new government will be more serious while building such embankment in future.

Stressing on the need that India should be serious while constructing such embankments, he said his government has initiated dialogue with India to resolve the problem.

"The Foreign Ministry has already written a letter to government of India to contain the damaged embankment," he said, adding the situation of flood was more serious than the government had earlier thought.

Nepal and India should work together to contain the embankment that was breached, he added.

When asked about Indian Embassy's statement which says that the works regarding the repair of the embankment was obstructed due to the non-cooperation by the Nepalese administration, Prachanda said he was not aware about that.

"The government will investigate what types of lapses were made in the process," he said, adding it is time to cooperate each other than to blame one another.