Water quality checks at several locations have been suspended since the start of the incident – 12.20am on Saturday.
The agency is warning against bathing at: Southsea East, Eastney, Eastoke, Beachlands West and Beachlands Central.
‘This incident has been identified as an abnormal situation, water quality monitoring has been suspended,’ a statement said.
‘Monitoring will resume once the incident is over.’
It added: ‘Bathing is not advised, due to pollution from other.’
News of the incident – although no further details have been released – has concerned people living in the area.
Dog walker Adrian Handley, 62, said he saw sanitary products and wet wipes at ‘every pace’ this morning near the Inn on the Beach pub, on Sea Front, Hayling.
‘Every pace had two maybe three items of it – wet wipes, sanitary towels, sewage-related litter,’ he said.
He added: ‘I used to swim but I won’t swim there anymore.
‘I regularly litter pick and I’ve picked up a lot of plastic sanitary wear.’
On Friday, posting on Hayling Sewage Watch, one woman said: ‘The water quality at West Beach on Hayling was absolutely disgusting today.
‘Last Sunday there was a whole layer of raw sewage floating on the surface of the water.
‘Today it was a band of smelly sediment in the shallower water, you couldn’t even see your feet in a foot of water.’
A spokeswoman for the Environment Agency said: ‘The Environment Agency received several reports of sewage litter and odour on Friday, October 8 at Southsea and Hayling Island.
‘Southern Water have not reported any spills in the area.
“Environment officers have been out on site (on Saturday) and found no evidence of sewage.
‘As a precaution we are advising against bathing in the area. If members of the public see any sign or pollution, please call our free incident hotline on 0800 80 70 60.’
It comes after Southern Water was fined £90m after pumping untreated sewage into the Solent and other waters from 17 treatment sites for six years from 2010.