Canterbury District Health Board says planktonic cyanobacteria, a toxic blue-green algae, has been found in Lake Forsyth-Te Wairewa.
People are advised to stay out of the water until health warnings are lifted.
Medical Officer of Health Alistair Humphrey says the algal bloom can produce toxins harmful to humans and animals and toxic algae are particularly dangerous for dogs.
Dr Humphrey says humans exposed to the algae may suffer skin rashes, nausea, stomach cramps, tingling and numbness around the mouth and fingertips.
He says no one should drink the water from the lake at any time, even if it has been boiled because boiling does not remove the toxin.
Fish and shellfish can concentrate toxins and their consumption should be avoided.