World disappears after breaking a block in Survival Mode.

World loads all blocks at first, and works fine in Creative Mode. However, upon switching to Survival in-game, the world literally disappears after breaking a block, leaving only entities, paintings, chests, lava and water. Same thing sometimes happens when I drop a block onto the world (Q). Updating from 1.7.8 to 1.7.9 does not help; anyone knows how to fix this?

Steps to Reproduce:
1. Load the world.
2. Change to Survival Mode using commands.
3. Break a block and watch the world disappear.