The collapse caused a faster flow of lava, according to local media.
Cadena Ser radio said the collapse had formed a new lava flow that was threatening several nearby towns.
The volcano emitted a loud booming noise and lava exploded with force from its crater.
Making his third visit to La Palma, one of the Atlantic Canary Islands, since the eruption began on Sept. 19, Sanchez said earlier on Sunday that the government would approve $239 million of aid funding this week.
The Cumbre Vieja volcano has destroyed more than 900 buildings. About 6,000 people have been evacuated from homes on the island out of a population of some 83,000.