The Environment Agency said it found "abnormally high levels of pollution" in a stream leading to Broadsands Beach in Devon.
Signs have been put up warning people that the sewage had entered the stream and was affecting bathing water.
The agency and South West Water are investigating where the pollution has come from.
More on this story and other news from Devon and Cornwall
An Environment Agency spokeswoman said: "Torbay Council were made aware of a pollution incident affecting the quality of bathing water at Broadsands.
"As a result they erected signage to warn and inform the public. Signage will remain until water quality has been restored."
A spokesman from South West Water said a team was sent to investigate the cause of the problem, which they believe was "a misconnection between the sewer and the surface water networks".
"We are assisting the EA with its investigations and we hope the beach will be re-opened this evening," the spokesman added.
Sewage has been found in water samples at a popular beach, prompting advice for people to stay out of the sea.