The Environmental Protection Authority has tightened its licence with Wannon Water, including a new condition that the wastewater it discharges must not contain visible floating foam, oils, grease or litter.

The tougher stance comes after volunteers expressed shock when they cleared hundreds of waxy pieces of congealed fat, oil and hair from Warrnambool's Shelly Beach in October, suspecting the material came from the Thunder Point outfall.

It also follows a 2017 nurdle spill where thousands of tiny plastic pellets washed up on the beach.

EPA south-west regional manager Carolyn Francis said the previous licence enforced an annual median wastewater quality, but the new licence now included maximum limits.

"Those maximum limits mean a long run of good days can't balance out a short burst of very bad ones," Ms Francis said.

"The tighter controls now built into the licence more clearly define how much is too much, and better match the community's expectations."

Beach Patrol's Colleen Hughson has contacted the EPA monthly for two years about pollution on Shelly Beach and said she was "very happy" with the outcome.

"It was a very weak licence," she said. "We have reported many incidences of pollution, but each time they have said we can't do anything because it's not part of the licence conditions. But now it is."

Wannon Water maintained in early October that pieces of fat on the beach did not come from the plant due to two manual screens in place since late 2017, but later admitted it removed the screens during high flows, most recently in August.

The water corporation has since announced that workers will clean tanks manually and inspect Shelly Beach every day. It will install a new automatic screen by mid next year.

Ms Hughson said she hoped Wannon Water would now deliver on its commitments.

"Just last Saturday there was fatty substances in the rock pools, there was fatberg, cotton buds coated in fat, tomato skins," she said.

The EPA's new licence regulations came into affect on November 20. The water corporation can appeal the new or amended conditions to the Victorian Civil and Administrative Tribunal within 21 days.

Wannon Water managing director Andrew Jeffers welcomed the licence changes.

"We are confident we already have the investments in place to ensure the plant can meet these expectations," he said.

"Wannon Water is driven not just by its obligation to meet the minimum requirements of its EPA licences but also by its own desire to protect the environment and to meet community expectations.

"We remind the community that placing the wrong items in the sewerage system can impact our infrastructure and the environment."

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