Green Lake near Horsham is closed to the public after the presence of blue-green algae was confirmed.
Chief Executive Officer Sunil Bhalla said samples of water from the lake confirmed very high levels of the potentially toxic algae.
Direct contact with the blooms can cause allergic reactions such as skin rashes or itchiness, sore eyes, ears and nose, or if swallowed gastroenteritis, nausea or vomiting.
“People who come into contact with this water should wash affected skin immediately in clean water,” Mr Bhalla said.
“People are also advised not to use the affected water for cooking, drinking, washing or showering. Boiling the affected water will not make it safe to use.”
Visitors to the area are advised that they can still enjoy other recreational activities such as bushwalking, boating and sightseeing around the lake.
Council staff will continue to monitor the lake for the presence of toxic algae, and update the status as required.