The problem started on Monday night at Endeavour Wharf pumping station, with sewage being released into the harbour leading to closure signs being placed at Tate Hill Beach.

Nearby residents have had to keep windows closed because of the smell coming from the harbour.

It was eventually brought to a halt in the early hours of Thursday morning after engineers worked to fit a new two tonne pump after divers found the old storm pumps were irreparable.

Yorkshire Water and the Environment Agency have both started investigations into the cause of spill, which has caused outrage locally.

Borough councillor Joe Plant said it was a disaster.

He said: "We don't know what impact it will have on the environment and it goes without saying it was a risk to public health.

"Why was there no backup system in place? I have heard that the damage could run to £1m; something needs to be done to make sure it doesn't happen again."

Whitby Town councillors expressed concern at the amount of time it took to put signs up at Tate Hill Beach and at Kiddies Corner warning people of the spill.

Whitby Mayor Coun Steve Smith said he had seen children fishing with handlines after the spill.

"I'm really concerned about public health and hygiene."

Coun Niall Carson said: "It took 24 hours to put signs up. It's unacceptable."

Maggie Hall, of Sandgate, had to keep her windows closed due to the smell.

She said: "You can see the toilet paper in the water and the smell is terrible. You think they would have systems in place to ensure something like this can't happen."

Despite the warnings people were still on Tate Hill Beach on Tuesday.

Esther Rowan, from Hull, was on the beach with her two children.

She said: "I saw the signs saying the beach was closed because of a spill so I have kept my children away from the water. At the end of the day the kids wanted to goe onto the beach and there is nothing physically stopping people."

The problem also affected the new shellfish holding facility on the fish quay.

Dave Winspear, secretary of the Whitby Shellfish Cooperative Limited, which runs the facility, said: "We were unable to pump water for a few days but luckily it didn't cause a massive problem for us."

A spokeswoman for Yorkshire Water said the pumping of sewage into the harbour had stopped at around 1am on Thursday after the installation of a new pump.

She said: "The pump, which weighs two tonnes and was transported all the way from Stansted, was lifted in and installed by specialist engineers."

It was hoped other affected pumps would be restored by the end of yesterday.

"We will now be carrying out a full investigation," she said.

She was unable to say how much sewage has been released and what the cost was of the damage to the pipes.

The Environment Agency confirmed it gave permission for Yorkshire Water to release the sewage to stop it backing up the system and would be carrying out its own investigation.