Up to 1.3 million people could be in danger of floods if the vast amount of rock and debris that has blocked the Jianjiang river bursts open, officials have warned.
More than 250,000 people have already been evacuated but many others will have to be moved out if the quake lake empties downstream rapidly.
According to local authorities, the controlled draining of some of the 200 million cubic metres (700 million cubic feet) of water behind the dam could start on Friday afternoon, the official Xinhua news agency reported.
On Friday morning, the water level had climbed to within just 50 centimetres (20 inches) below the lowest point on a sluice channel that Chinese soldiers dug last week, it said.
But by late afternoon the water had not begun to flow, with the events being shown live on state television.
More military personnel were airlifted to the dam on Friday for further drainage preparations as weather forecasts predicted rain and thunderstorms this weekend, state television said.
Crews were expected to work on widening the channel for the next three to five days, said the report, which showed them toiling beneath the debris dam.
The May 12 quake triggered massive landslides in mountainous Sichuan province, blocking rivers and creating more than 30 unstable "quake lakes" that are threatening millions of people.
The death toll from the earthquake rose to 69,130 on Friday, with another 17,824 missing, the government said.
Meanwhile, families continued to complain of corruption in the collapse of thousands of schools in the region as the government appeared eager to put a lid on potential unrest and open reporting on the quake's aftermath.
"We demand an investigation and for those responsible to be punished as quickly as possible," said You Zhenghua, whose daughter Zhong Suyan was among the hundreds who died when the Juyuan Middle School collapsed during the quake.
"We don't want money or anything else. Just justice."
Parents have held unprecedented angry protests over the issue, blaming official corruption for shoddily built school buildings that collapsed when the quake hit.
Chinese police on Friday restricted the movements of foreign journalists in the earthquake zone, the latest sign that initial openness on covering last month's disaster was drawing to a close.
Two AFP journalists were barred entry to the town of Wufu, where parents have protested the collapse of another school, while other western journalists said they were harassed and detained by police for their reporting activities.