The New Plymouth District Council is blaming a sewer pipe blockage on a 60-tonne piece of fat.
The council said a sewage spill at Ngāmotu Beach overnight was responsible.
Warning signs have been put up at Ngāmotu Beach and residents of nearby suburbs told not to flush their toilets.
The council said a sewage pipe near the Ngāmotu Pump Station became blocked by what appears to be 60-tonnes of animal fat.
It said it had contained discharges, but was still asking residents of Moturoa, Blagdon and Spotswood to limit the water going down their drains.
The council said it was unsure how long it would take to remove the fat from the system.
The Taranaki District Health Board said the incident presents a "low public health risk".
New Plymouth mayor Neil Holdom said he was "gutted" that a failure at an industrial plant led to the spill.
Mr Holdom said an unnamed company had made quite a mess.
"They've dumped a significant amount of tallow, hot tallow, into our wastewater network and it's overwhelmed two pumping stations and filled a whole bunch of pipes and set hard."
Mr Holdom said council staff had this morning been focussing on containing the incident protecting the environment.
"This is really disappointing and our team are just going to be working around the clock to solve it.
"But we've just got to get it done and minimise the impact to Ngāmotu Beach, it's a beautiful recreational area."
He did not know how much sewage had been spilled.
He said the incident had been referred to the Taranaki Regional Council which would be responsible to taking any enforcement action if required.
The New Plymouth site of Austrialian company GrainCorp has confirmed it is the source of the tallow spill.
In a statement, the bulk grains and edible oils company said the source of the spill had been contained, but it was too early to confirm the extent or cause.
"GrainCorp takes its environmental obligations extremely seriously and sincerely regrets any disruption caused by this incident. We will continue to work closely and constructively with authorities to rectify it."