The Otago Regional Council is warning people to keep children and dogs out of the potentially toxic water.
Tests results from samples of the thick scum taken on Friday confirmed the presence of cyanobacteria algae, which could produce toxins that might cause skin reactions in people and animals, council engineering, hazards and science director Dr Gavin Palmer said.
Warning signs had been put up at the lagoon outlet and would remain in place until further notice, because the scum was near public access points to Tomahawk Beach.
''We have put up the signs because, while the contaminated water is relatively shallow, it is still deep enough for children and dogs to swim in and potentially be at risk if they do so.''
The algae had been present earlier in summer and then fallen to very low levels. It was not possible to predict how long it would take to drop again, he said.
Council staff would continue to monitor the situation and update the public on developments.
If people saw large amounts of green algae they should contact the ORC pollution hotline on 0800 800-033.
