Traces of the toxin PCB have been found in samples of soil from the Nore river bed in Co Kilkenny which has been spread in an area planned for a public park and children's playground.
The river bed is being dredged by the Office of Public Works (OPW) and the soil redistributed under the Kilkenny flood relief scheme.
The presence of the toxin could prove a setback for the €40 million scheme, which began last summer and was to take three years. The soil has been spread in a planned amenity area at Dukesmeadow near Kilkenny city.
At present the area is a field not used by the public. The soil has been deposited there and is 40 metres from houses. The plan was for it to be used as undersoil, given a layer of topsoil, then landscaped as a community green space and play area for children.
The flood relief scheme involves removing the material from the river bed and spreading it at three locations, Dukesmeadow, Bishopsmeadows and Ossory Road. To date most of the material removed has been spread at Dukesmeadow.
An OPW spokeswoman said it had taken 12 samples of soil, and traces of PCBs (polychlorinated byphenyls) above the "clean-up" level had been found in two.
Under the guidance of the Environmental Protection Agency (EPA) it was conducting a battery of further tests on the two positive samples. "We will then be able to assess further the situation and see what the significance is of the traces," she said.
The tests were under way at the moment and would be completed in about six weeks. The OPW was taking steps to ensure the soil sites were adequately secured, she added.
According to the OPW, the EPA had confirmed that the present soil deposits did not pose any immediate threats to public health.
A spillage of PCBs into the Breagagh river occurred in 1980. Most of it was recovered immediately because of prompt action by Guinness (Ireland) Ltd, the OPW said in a statement. A survey in 1997 identified some areas of the Breagagh and Nore rivers where PCBs were present. Guinness had agreed to a clean-up operation.