Stockyards are the most likely source of a significant discharge of animal effluent into Feilding waterways, the regional council says.
Residents have been told not to swim, wade or fish the Makino Stream and Oroua River because of the waste contamination.
Manawatu-Whanganui Regional Council staff last night discovered a significant amount of effluent being discharged into the Makino Stream near Rata Street.
The council's manager for strategy and regulation, Dr Nic Peet, said the discharge most likely came from the yards where sheep and beef sales were held every Friday.
He said the council was alerted by a call by a member of the public to its pollution hotline.
"There was a really obvious discharge via the stormwater system," he said. Staff traced it back to the stockyards and from there were able to have it stopped and shut off.
Despite the source of the leak being identified and stopped, a signficant amount of waste had entered the stormwater system and stream.
Dr Peet said people shouldn't go into Makino Stream or the Oroua River, which includes several popular swimming spots, such as Awahuri and Kopane Bridge.
He said the effluent would be dispersing.
"At the side there will be encrusted greenish looking material but gradually, as that disperses through the water system, it will disappear.
"I imagine it will be unswimable at least until the middle of this week, when we are forecast to get some really heavy rain," he said.
In the meantime the council would continue testing the waterways for E-coli.
Dr Peet said a formal investigation would begin on Monday and could take between one and four months.
Anyone with gastro symptoms after swimming in the water is being asked to notify public health officials on 0800 611 116.