Southland Regional Council says no more diesel is leaking into Foveaux Strait after salvage company divers plugged air vents on the grounded oyster boat Torea.
The boat struck rocks and began to take on water on Friday afternoon, before the skipper managed to run the vessel aground close to Ruapuke Island.
The 23 people aboard managed to get to safety.
The council had a fishing vessel monitoring Torea through Friday night because of the risk of a spill of the 3000 litres of diesel on board.
But a council spokesperson Michele Poole says there will be no more diesel leaking into the sea.
"The divers have successfully plugged up the air vents in the fuel tanks of the Torea which means that all diesel is now contained on board so there will be no more seepage from the vessel."
An aerial inspection of Foveaux Strait shows a 10-metre wide slick of diesel oil that has leaked from the boat is now dispersing in choppy seas.
The Torea is sitting on the seabed, listing to port, with most of the deck underwater. Salvage is expected to take about a week.
The team from New Zealand Diving and Salvage are also salvaging equipment such as the radar atop the mast and are assessing the damage to the hull, while they wait for more salvage gear to arrive on Sunday.