The Victorian Country Fire Authority's (CFA) training facility at Fiskville, north-west of Melbourne, has been closed indefinitely after chemical residue was found in the water supply.

The chairman and chief executive of WorkSafe Victoria have also resigned after concerns about the agency's handling of complaints made about the site.

The facility, located near the town of Ballan, was already the subject of a state parliamentary inquiry into concerns firefighters were exposed to toxic chemicals dating back to the 1970s.

Now, a chemical residue, known as PFOS, from a banned firefighting foam has been found in mains water stored in two large tanks on the site.

The CFA's chief executive, Michael Wooten, said "low levels" of contamination were discovered in tanks fed by mains water and the closure was precautionary.

"Drinking water is treated by other organisations to make sure it's safe for drinking so we didn't believe the mains water was going to represent a risk to the site, and that's why we hadn't tested it before," he said.

However Peter Marshall, from the United Firefighters Union, said the substance was "extremely toxic and dangerous".

"It is known to cause cancer and is actually banned in most countries," he said.

WorkSafe Victoria chairman chief David Krasnostein and chief executive Denise Cosgrove have quit at the request of the State Government.

The safety watchdog had previously declared the site to be safe, despite the ongoing concerns raised by firefighters and staff.

A dangerous place that has made people sick

Premier Daniel Andrews said there were "real uncertainties" about the future of Fiskville and said it would not reopen until it was safe.

"People have stood up and said 'this is safe', and the place is not safe," he said.

"That the water had been tested, that we can confident. Clearly we cannot be confident.

"How could you possibly have confidence?

"This is a dangerous place that has made people sick.

"The families of those who died are entitled to justice and answers."

Emergency Services Minister Jane Garrett said she was "deeply concerned" about the discovery and ordered an investigation.

"It's unclear how they got into those water tanks and where else they may be," she said.

"This is something that must be acted upon immediately which is why the site has been shut down."

Mr Marshall said the facility should have been closed earlier.

"You have to ask the question why this testing wasn't done at that location at an earlier stage?"

Ms Garrett said it was extremely unlikely the facility would ever reopen.

"[A] Monash University health study showed that there were significant increases in some cancers for people who'd been training and working at the site," she said.

"Now we have another black mark against this training facility with water contamination that's been found today and really I don't believe that this site will continue."

Long history of concerns at Fiskville

More than a dozen people linked to the Fiskville site have died of cancer, including whistleblower Brian Potter, a former fire chief who suffered a series of cancers over a period of 15 years.

A report in 2012 confirmed firefighters had been exposed to chemicals through water used in hot fire training exercises.

But the report also declared the facility was safe and said the risk of getting cancer was low.

However the CFA admitted it did not act quickly enough to respond to the cancer concerns.

Mick Tisbury, a senior station office with the Metropolitan Fire Brigade (MFB), started investigating the water quality at Fiskville in 2012.

Training recruits reported the water had an odd smell and colour.

"The more we dig, the scarier it became," he said.

"For years there was report after report, after report from external environmental and health organisations all saying the water is category A industrial waste. It's a matter of urgency, stop using it and clean it out.

"It was so heavily contaminated that it was actually illegal to remove it from the site, yet the CFA and MFB senior management knew about this."

The firefighters' union banned its members from the site, however, the site kept operating. Some officers simply refused to go there.

"Hopefully it'll never be open again," Mr Tisbury said.

"The next step will be ensuring that everyone who was ever exposed has regular health monitoring.

"There's nothing we can do about what we've been exposed to but if we can identify stuff early and nip it in the bud, you've got more chance of survival."