Residents first saw the strange blue liquid running off the cliff face into the ocean late last week.

"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.

Colour coded? Strange coloured water at Malabar was due to dyed fertiliser.

"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.