Queenstown Lakes District Council staff and contractors said last night they had stopped the overflow and cleaned and disinfected the beach.
About 100m either side of the manhole would be closed until water samples showed there was no impact on water quality in the vicinity. Signs were erected last night to show the closed area.
CTV cameras would be used to inspect the pipes and find the cause of the blockage.
QLDC chief engineer Ulrich Glasner said the overflow came from an underwater manhole just off the beach near the Remarkables Primary School.
The blockage comes after two sewers in downtown Queenstown overflowed after becoming blocked by stones and debris in December.
Those incidents led the QLDC and Otago Regional Council to issue a warning before Christmas for residents to be careful what they put down drains.
''Everything that runs down the drain ends up in a stream or river,'' QLDC general manager infrastructure and assets Erik Barnes said.
He cautioned anyone carrying out building work over summer to make sure debris did not end up in drains or sewers.
''We know that accidents happen sometimes, and we'd much rather be called out to retrieve something that went in a drain or a sewer by mistake then have to respond to an emergency overflow,'' Mr Barnes said.
