Dissolution of underground cavities by ground water (or solutions) may cause environmental problems and geological hazards. Efficient modeling and numerical solving of such phenomena are critical for risk analysis. To solve the cavity dissolution problems, we propose to use a porous medium based local non-equilibrium diffuse interface method (DIM) which does not need to track the dissolution fronts explicitly as the sharp front methods (such as ALE). To reduce the grid blocks when using the DIM method, an adaptive mesh refinement (AMR) method is used to have higher resolutions following the moving fronts. An efficient fully implicit scheme is used by taking care of the velocities across the gridblock interfaces on the AMR grid. Numerical examples of salt dissolution under different flow conditions were performed to validate the modeling and numerical solving. Core-scale and reservoir-scale cases were carried out to study the mass transport and the evolution of the profiles of the dissolution fronts. Gravity-driven physical instabilities are found to be more strong in the infinite channel with upper and lower planes than in the 3D tube configuration under the same condition. The implementations with the AMR method also showed a very good computational efficiency, while obtaining good agreement with the finest-grid solutions.