Specialist advice was being sought yesterday from the Queensland Fire Department, which provides expertise in dealing with hazardous chemicals.

Waikato mayor Aksel Bech told RNZ that the chemical was suspected to have come from an underground petrol or LPG type of storage tank - possibly from a petrol station, as only a high-volume spill could have produced such a strong smell.

As soon as the smell was detected, the water was diverted to avoid it contaminating the water treatment plant, while workers had been going from manhole to manhole to find the source of the spill, Bech said.

Around 10.30pm, residents were returning home and four fire appliances were preparing to leave, Fire and Emergency Assistant District Commander Brad Harvey said.

Firefighters had been flushing the drains and air quality readings had returned to safe levels.

Residents who were evacuated earlier in the evening were able to return home. The advice to other residents to stay inside with doors and windows shut was lifted.

“The scene will be left in the hands of local water management staff. The nature and source of the substance which prompted the emergency response has not yet been established,” Harvey said last night.

Waikato District Council said IAWAI was working with Fire and Emergency to flush the pipes, with 15 homes evacuated for safety reasons.

Drinking water and stormwater networks were not affected.