The Bay of Plenty Regional Council says it could be five years before eels from the Kopeopeo Canal in Whakatane are safe to eat.
Investigations dating back to 2005 found high dioxin levels in the water posed a risk to human health, and since then there had been a warning on eating tuna from the canal.
Dioxin is highly toxic and could cause reproductive problems and damage to the immune system.
A project is under way to remove the sediment containing dioxins from one of the canal's containment sites. The council said the eels eat the sediment and if people then consumed the eels they could become very sick.
Once the sediment from the contaminated site is moved, it said it would not be safe to eat the eels for another two to five years. They would be monitored every year for dioxin levels.
For 30 years from the 1950s the canal was contaminated due to stormwater discharges from a sawmill that treated timber with pentachlorophenol (PCP).
A Sawmill Workers Against Poisons spokesperson and Ngati Awa descendant, Joe Harawira, said considering the high levels of contamination, he was not surprised that eels could not be eaten.