Arsenic has been dumped in the Opuha River in South Canterbury, says Environment Canterbury.
White flakes were noticed in the river when sediment samples were being taken in August.
Test results of the flakes show high levels of DDT - a pesticide which was phased out in the 1960s - and arsenic.
Environment Canterbury chief executive Bill Bayfield said an urgent clean-up was being conducted this afternoon.
Opuha Water Limited have lowered the river to make the clean up easier.
"The only conclusion we can draw is that someone in the last couple of months has dumped DDT and arsenic into an area of the river."
"I don't understand why someone would dump it in the river, what kind of person could do this?" Mr Bayfield said.
He believed a few kilograms of soil containing DDT has been dumped.
"From reports, it looks like the pesticide has been dumped in one location and has not travelled further down the river, but we will be conducting further tests to establish if it has."
Mr Bayfield said he had worked on numerous investigations but had never seen direct dumping like this before.
The police, South Canterbury Medical Officer of Health and Timaru District Council have been notified of the dumping.
It was not the first time concerns have been raised about contamination of the Opuha Lake and River.
Allegations were made in 2011 of drums of DDT and DDE, being buried beneath Lake Opuha when the lake bed was being prepared in 1998.
Ecan surface water science manager Tim Davie said trout were analysed in 2011 which found no detectable DDT and only 0.15 parts per million of DDE over 30 times below recommended health risk levels.
Ground-penetrating radar tests of the lake bed were carried out in 2011 and 2015 and showed no evidence of metal containers of any sort.
Recent testing of the lake shows no evidence of elevated pesticide contamination in the sediment.
"As far as we are concerned we have found nothing to support claims that drums of pesticides were dumped in the lake before it was filled, but i can not say for sure." Mr Bayfield said.
What is DDT?
Dichlorodiphenyltrichloroethane or DDT is a pesticide. If humans have high levels of exposure with DDT over a long time it can cause birth defects, fertility problems, greater susceptibility to disease and some types of Cancers. The use of DDTs in New Zealand was phased out in the 1960s and 1970s.