JAKARTA - A powerful earthquake jolted eastern Indonesia, killing at least one person, crumpling homes and briefly triggering a region-wide tsunami warning, officials said early on Monday as they surveyed the damage.

The 7.5 magnitude quake struck off the coast of Sulawesi island in the middle of the night, sending thousands fleeing homes, hotels and even hospitals.

The US Geological Survey said the offshore quake was centred 135 kilometres from the provincial capital of Gorontalo at a depth of 21km. It was followed by two strong aftershocks.

The Pacific Tsunami Warning Centre said the temblor had the potential to generate a destructive tsunami along coasts within 1,000km. But hours after the threat had passed, many terrified Sulawesi residents were refusing to return indoors.

By morning, officials were starting to get a better sense of the damage.

Mr Rustam Pakaya, the head of the Health Ministry's Crisis Centre, said 'a number of houses and schools collapsed', but so far, he knew of only one death, a person from the northern Gorontalo city of Kwandang.

Mr Robert Bano, a resident in the provincial capital, said the massive quake shook his house for more than two minutes, knocking paintings from the wall. He grabbed his crying children and, along with many others, ran outside. Some fled to high ground, others gathered in the streets.

A few guests streaming from Paradiso Hotel were so afraid they fainted, the official news agency Antara reported.

A witness in the city of Poso said patients from at least one hospital were evacuated.

Indonesia is prone to seismic upheaval due to its location on the so-called Pacific 'Ring of Fire', an arc of volcanos and fault lines encircling the Pacific Basin.

In December 2004, a massive earthquake off Indonesia's Sumatra island triggered a tsunami that battered much of the Indian Ocean coastline and killed more than 230,000 people - 131,000 of them in Indonesia's Aceh province alone.

A tsunami off Java island last year killed nearly 5,000.