White foam flowing down Melbourne creek

A mysterious white foam is tumbling down a creek in Melbourne's south-east, prompting water authorities to investigate.

A white, foamy substance was flowing along Dandenong Creek in Heathmont on Sunday and clouds of the substance are also floating in the air.

"It's so strange. It looks a bit like fairy floss," local resident Natasha Farrow told AAP.

The Victorian Environment Protection Authority confirmed it had officers investigating to determine the source of the problem.

"Avoid contact until further notice," the EPA said in an alert.

Footage shared by community group First Friends of Dandenong Creek shows the foam polluting hundreds of metres of the creek.

A witness said it smelled "caustic" and questioned whether it was a health concern, given the creek runs along a bike path and through parklands.

"It has a fairly caustic smell this stuff, so you really don't want to come in contact with it," the witness said.

"This is not a domestic incident. This is an industrial dump."

Melbourne Water is also responding to the substance, which is polluting a part of the creek near HE Parker Reserve.

Reports of the white foam first came arose on Saturday evening.

The creek flows from the Dandenong Ranges and winds through nearby suburbs before connecting with a river that empties into Port Phillip Bay.