The residue found in the tanks, perfluorooctane sulfonate (PFOS), was in firefighting foams used at the site until 2007 and showed up in tests results the CFA received on Monday morning.

CFA CEO Michael Wootten said all water at the site, including that for drinking, would be tested in coming days.

"As a precaution, the only prudent course of action is to suspend all operations until further testing is completed and the results delivered," Mr Wootten said.

"The strong advice from one of Australia's pre-eminent toxicologist is that any risk to the health of people at Fiskville is likely to be very low."

Mr Wootten said water testing at Fiskville had recently been expanded to included the tanks in question. He said recent tests uncovered the PFOS residue in the tanks, which hold mains water and had been used for training since 2012.

In 2012, the same chemical residue was found in four dams at the site that had been used to store water for firefighter training.

The controversial training site has been linked to a cancer cluster, with concerns about the site first being raised in 2011.

Monash University released a study in January which examined cancer and death rates among 606 people who worked at the site between 1971 and 1999 and showed there were 69 cancer cases that resulted in 16 deaths.

When compared to the Victorian population there was found to be a significantly higher risk of cancer for the nearly 100 full-time workers at the site.

Victoria Premier Daniel Andrews has pledged to set up a parliamentary inquiry to investigate how the high rates occurred, how widespread the problem is and who should be held responsible.

United Firefighters Union secretary Peter Marshall the site's closure would leave many firefighters worrying about the health implications of their time at Fiskville.

"In mid-2012 the alarm was sounded on the water used by firefighters training at Fiskville," he said.

"It is almost incomprehensible that a government in the modern era could treat its staff and volunteers as expendable while withholding its knowledge of the dangers they were facing."

The UFF has long been critical of the previous state government and the CFA's handling of Fiskville and has campaigned for recognition of the workplace-related cancers at the site.

Emergency services minister Jane Garret said investigations into the most recent water contamination at Fiskville would be exhaustive and overseen by the Department of Justice and Regulation.

"This is a very serious and distressing matter for all those people connected to Fiskville," she said.