UPDATE 3PM: Kiama Council says the spill at South Bombo Beach is not oil or sewage.
"The substance appears to be organic," the council said.
"Council will test samples to confirm what it is. Council officers are now attempting to identify the source of the spill."
Sydney Water said they had a technician go out and confirmed the substance was not coming from a Sydney Water outlet.
12PM: Kiama Council is investigating an apparent oil spill at Bombo Beach.
The spill was spotted by a resident walking their dog before noon on Thursday, June 13.
"My golden retriever cam back down the beach and one side of his white fur was full of oil," he said.
"It really smelt like engine oil. It took forever to get out."
He said the spill appeared to be coming from the top of the cliff face.
"You can see it trickling down, like fingers, towards the water," he said.
"I dug in one spot, and it penetrates the sand quite deeply. It will make the water soon.
"You can see it in the vegetation coming down the cliff face. I've never seen an oil spill in Kiama before."
The council was contacted about the spill, and said it had contacted Sydney Water and would notify the Environment Protection Office as part of its investigations.
"We are sending staff there now," a spokesperson said.
Sydney Water has been contacted for comment.