"It was so unusual,"  Fred Panzetta said. "We went down and saw it, and wondered what it was - was a bright blue kind of colour.

"The local paper said they were still looking into it, but thought it was plumbers' dye."

The aqua-coloured pool below the cliff at Malabar harked back to the dark old days when Malabar beach was notoriously polluted.

The bright colour in the water and unidentifiable odour when it suddenly appeared last Friday had locals and Randwick Council stumped. The beach was closed for 24 hours on Sunday as a result of the pollution.

"When we came here in 1970 the suburb was lower down the list [of popularity]," Neville Moses said.

"The sewer, of course, which goes off the end of the point at yellow rock, was pouring a lot of sewage, treated but not very well treated, into the ocean and it regularly came back into the bay. It was unswimmable, the beach."

But a $2 million stormwater diversion project in 2013 turned the beach around. It had never been better, locals said, and pollution was a thing of the past.

But it was a different story on Sunday, as questions remained over what had turned the water bright blue, keeping swimmers away.

Tests have since confirmed the culprit was a fertiliser containing dye that had been applied to Randwick Golf Course, on the top of the cliff.

The golf club said it was working to ensure the run-off does not happen again.

"It would appear the run-off was caused by over-watering on a day where temperatures soared into the high 30s, which caused the dye to seep through the ground and run off into the nearby bay," the club explained.

The council said they had not fined the club for the run-off, but had issued them with a warning.

"It's something we can do when we someone has committed a pollution offence," the council said. "Basically, we require them to undertake certain works and activities to ensure this sort of pollution doesn't happen again."

Laboratory tests conducted by the NSW Environment Protection Authority (EPA) confirmed the water sample contained nitrates, phosphorous and potassium, which are indicative of a fertiliser. Coloured dyes are sometimes mixed with fertilisers to show where it has been applied over large spaces.

Randwick Council and EPA have met the golf club members to review their chemical application process.

"The club will be issued with a Prevention Notice under the Protection of the Environment Operations Act 1997 requiring them to undertake works to prevent future pollution incidents," the council said.

Classified as "not hazardous" by Worksafe Australia criteria, health effects associated with the dyed fertiliser are short term.

"Fortunately on this occasion this pollution was fairly minor, which is good," the council said. "But it is still not acceptable, so they need to look at their practices and work out a way so it doesn't happen again.

"The golf club has been quite proactive and open to these ideas, and our staff have been working with them well. And they have come up with an action plan which will hopefully prevent from this happening again."