An investigation has been launched after a quantity of oil was dumped into the River Wandle.
The Environment Agency confirmed they were alerted to the illegal dumping after being alerted by Thames Water.
Last month, the water company had taken steps to soak up the oil and pump fresh water into the river’s tributary, near Morden Hall Park – after the leak on July 13.
An Environment Agency spokeswoman said: “We don’t know what type of oil it was but we believe it was from the Willow industrial estate.
“Thames Water has already put booms in the river to soak up the oil. They were skimming if off.
“We will do some investigating to see where the source is an where it comes from.”
Fly-tipping, which includes river dumping, is a criminal offence and can attract a maximum fine of £50,000 or a five-year jail term in the most severe cases.
The incident comes three years after the Government agency launched a campaign against illegal dumping in the Wandle, which was highlighted as a “likely pollution hotspot”.
In December 2009, EA officers visited the Willow Lane industrial estate, as well as the Weir Road industrial estate, Wimbledon, Lombard industrial estate (Colliers Wood) and Wimbledon train depot, to promote their anti-dumping campaign.
It is understood a similar campaign in Merton will be launched later this year if further incidents are reported.
Residents who see illegal dumping should call 0800 807060.