WaterNSW has issued a red alert level warning at the dam, meaning people should avoid activities where they come into direct contact with the water, such as swimming.

The water is also unsuitable for domestic uses including showering and washing, while WaterNSW warns contact with the water may also pose a threat to livestock and pets.

However, Bathurst's town water supply remains unaffected by the outbreak.

ALSO MAKING NEWS:

"The species of blue-green algae identified are potentially toxic and may cause gastroenteritis in humans if consumed and skin and eye irritations after contact," WaterNSW said in a statement.

"People are advised not to enter the water, not to drink untreated water or bathe in water drawn from the dam while this Red Alert level warning is in place. Boiling the water does not remove algal toxins.

"Town water supplies remain unaffected and safe to drink."

Livestock owners should check stock water supplies for blue-green algae and are advised to remove stock from foreshores where surface scum is visible or blue-green algae are suspected.

Blue-green algae usually appear as green paint-like scums on the water, near the edges, or as greenish clumps throughout the water. It makes the water appear dirty, green or discoloured and generally has a strong musty or earthy odour.

People should not eat fish, mussels or crayfish from red alert warning areas.

WaterNSW said blue-green algae occurs naturally and can reproduce quickly in favourable conditions where there is still or slow-flowing water, abundant sunlight and sufficient levels of nutrients.

It is not possible to predict how long the algae will remain at high levels. Regular monitoring will continue and the alert will be lifted as soon as the high levels of algae dissipate.

People who believe they may have been affected by blue-green algae are advised to seek medical advice.

Updates about blue-green algae blooms and red level warning areas can be obtained by calling 1800 999 457 or by visiting http://www.waternsw.com.au/water-quality/algae.