A brown plume emerged in the water at Wellington's Houghton Bay this afternoon, bringing with it a "rank" smell.
Surfer Dominic Geers spotted the discharge along with other concerned locals who stopped to take photographs.
"They walked down to the stream and said the smell was so intense it made them feel ill," he said.
"It's unfortunate, but we'll continue surfing here despite it's toxic nature. It's a real shame as I think it's one of the most beautiful bays in Wellington."
Geers said the smell coming from the carpark was "rank".
He was surprised by the size of the discharge because there hadn't been much rain, he said.
"There's always a trickle of toxic waste making its way into Houghton but I have never seen it like this."
By 5.30pm Metservice reported 3.9mm of rainfall at nearby Lyall Bay so far today, with another 5.7mm forecast.
A Wellington Water spokesperson said the discolouration was leachate being discharged through the stormwater system due to rain.
"Wellington Water crews responded, investigated and are now cleaning up. As a precaution, we recommend people stay clear of the beach until that cleanup has been complete."
Houghton Bay has a long history of leachate discharges, which originate from the former Houghton Valley landfill and are carried to the bay via the stormwater system.
Current best practice includes catchment lining, layering, diverting water flows, and capping, but those measures were not used at the landfill.
It means rain and subsurface water picks up dissolved and suspended components from the biodegrading activity of anaerobic bacteria in the landfill which forms leachate.
A 2012 investigation found the effects of the discharge in the surrounding environment were minor.
But in response to concerns, Wellington Water has increased monitoring and inspections, installed an odour control chamber, and introduced a depth sensor as an early warning system.