An officer at Vang Vieng's Tourism Police office, who refused to give his name, told The Associated Press on Friday that a "number of people" had been detained in the case but that no charges have yet been filed.
Staff at the Nana Backpacker Hostel, which was still operating but not accepting new guests, confirmed the manager and owner were among those taken in for questioning.
Bianca Jones and Holly Bowles have died they after becoming ill along in Vang Vieng, Laos. (HANDOUT/7NEWS)
Tourist police offices are common in Southeast Asia and are set up specifically to help with incidents involving tourists and other foreigners.
The US State Department on Friday issued a health alert for citizens travelling in Laos, warning of "suspected methanol poisoning in Vang Vieng, possibly through the consumption of methanol-laced alcoholic drinks" following similar alerts from other countries whose citizens were involved.
The alert came as a second Australian teenager who fell critically ill after drinking tainted alcohol died in a hospital in Bangkok.
Holly Bowles, 19, had been on life support following the poisoning in Laos more than a week ago.
"We are so sad to say that our beautiful girl Holly is now at peace," her family said in a statement to Australian media.
"We find comfort and solace in knowing that Holly brought so much joy and happiness to so many people."
The Australian government had announced Bowles' friend Bianca Jones, also 19, had died in a Thai hospital where she had been evacuated for emergency treatment, and that Bowles remained in a hospital "fighting for her life".
The two Melbourne women fell ill on November 13 following a night out drinking with a group.
They failed to check out from the Nana Backpacker Hostel as planned and were found sick in their room and then taken to Thailand for emergency treatment.
Thai authorities confirmed that Jones had died by "brain swelling due to high levels of methanol found in her system".
A 28-year-old British woman, Simone White, also died from suspected methanol poisoning in Laos, the British Foreign Office said.
Vang Vieng is particularly popular among backpackers seeking partying and adventure sports. (AP PHOTO)
An American and two Danish tourists also died, though specifics about the causes of death have not been released.
New Zealand's foreign ministry said one of its citizens was sickened in Laos and was a possible victim of methanol poisoning.
Laos is a one-party communist state and the government keeps a tight lid on information.
In this case, officials have released almost no details.
The foreign ministry has refused to comment, and in Vang Vieng the small hospital where some of the victims are believed to have been treated initially referred all questions to the town's health office on the hospital grounds.
The town health officials refused to comment, saying they lacked proper permission.
Methanol is sometimes added to mixed drinks at disreputable bars as a cheaper alternative to ethanol, but can cause severe poisoning or death.
It is also a by-product of poorly distilled home-brew liquor, and could have found its way into bar drinks inadvertently.
Landlocked Laos is one of Southeast Asia's poorest nations and a popular tourist destination.
Vang Vieng is particularly popular among backpackers seeking partying and adventure sports.
Duong Duc Toan, the manager of the Nana Backpacker Hostel, told the AP the day before he was detained that the two women had joined other guests for free shots of Laotian vodka before heading elsewhere and returning in the early hours of the morning.
