The discolouration prompted a multi-agency response, with the NSW Environment Protection Authority believing the substance to be an algal bloom.

At this stage, the results of water samples are yet to be determined, leaving it a mystery as to whether the algae poses a health risk to the 1600 competitors who took to the water for the popular MMJ Aquathon.

"The bloom is likely to dissipate naturally in the next few days and beachgoers are advised to look out for signs of the algal bloom before entering the water," an EPA spokesperson said.

Read more: Young child struck by lightning at Barrack Point

Firefighters responded to calls of a substance at Belmore Basin about 12.10pm Thursday, with a fire truck and two hazardous materials trucks arriving on scene, as beachgoers peered on at the phenomenon.

EPA officers and Wollongong City Council were also called to investigate.

Council put up signs along the harbour warning against swimming - which will remain until test results reveal whether the algae is harmful, according to EPA.

Blue-green algae can appear as specking, suspended clumps or as algal scums which take the form of green or yellow discoloured slicks on the water surface.

Contact with toxins in harmful algae can cause irritated skin and ingesting it can cause gastroenteritis symptoms like vomiting, fever and headaches.

NSW Department of Primary Industries Fisheries and NSW Maritime have also been alerted to the possibility of algae at the harbour.

We've made it a whole lot easier for you to have your say. Our new comment platform requires only one log-in to access articles and to join the discussion on the Illawarra Mercury website. Find out how to register so you can enjoy civil, friendly and engaging discussions. Sign up for a subscription here.