A welded joint in the poly-pipe fractured at a point where it runs under private land to the west of the pondage complex.

An estimated one to two megalitres of mine water has been contained in about 100 to 150 metres of a tributary of Myers Creek, according to Environment Protection Authority regional manager Jeff Cummins.

The landowner discovered the leak about 6 am yesterday morning. He notified Bendigo Mining who reported the incident to the EPA about 7.30am, Mr Cummins said.

Fortunately, no rain was forecast for last night, but the EPA wanted the water pumped into the evaporation ponds as quickly as possible.

Mr Cummins said the EPA requested a second pump be used to speed up the process.

Bendigo Mining chief operating officer Rod Hanson said it might take up to a day to clear all the water.

He said the company was working closely with the landowner and he did not expect any "significant environmental impact from the discharge."

Bendigo Mining's water treatment plant at New Moon recycles some of the ground water being pumped out of the historic mine workings under the city and pumps the residual brine to the Woodvale ponds.

Although the water that leaked had not been through the plant, it does contain elevated levels of arsenic and other salts.

The EPA tested the water and Mr Cummins said the initial indications were that it was untreated mine water.

Laboratory test results and an incident report from Bendigo Mining are expected next week.

"We need to sit down with the company and see why this has happened," he said.

"We will be looking at things like maintenance records for the pipeline and the quality assurance that was in place when the pipe was laid."

He said the pipeline was installed about seven years ago and before that mine water had been discharged along a creek to Woodvale.

"We've had a quite a few residents contact us raising concerns about (yesterday's leak)," he said.

"There is anxiety out there about it."

The EPA would continue to monitor the clean-up during the weekend, Mr Cummins said.

Bendigo Mining is planning to increase the capacity of the New Moon treatment plant next year.

Ray Leerson, a member of the company's environmental review committee, yesterday said it was fortunate that the fracture had occurred before higher volumes of brine from the plant were flowing along the pipeline.