The firefighter training college at Fiskville, north-west of Melbourne, was immediately closed indefinitely on Monday after a dangerous chemical was found in water tanks.

Premier Daniel Andrews said he had "lost confidence" in WorkSafe chief executive Denise Cosgrove and chairman David Krasnostein.

The government asked for their resignations after they were unable to guarantee they had tested the water at Fiskville, despite assurances in December that the site was safe.

"I will not be lied to, and I will not accept incompetence," Mr Andrews said.

Following news on Monday about contamination at Fiskville, WorkSafe was again grilled about site safety and was unable to confirm the water had been tested.

The toxic residue found in the new test results – perfluorooctane sulfonate (PFOS) – was in firefighting foams used at the site until banned in 2007.

It is the latest contamination to be uncovered at the Fiskville centre, near Ballan, which has been dogged by health fears since 2011 after being linked to a cluster of cancer diagnoses.

The controversial site already the subject of a parliamentary inquiry into concerns firefighters were exposed to carcinogenic chemicals dating back to the 1970s.

Questions now remain about Fiskville's long-term future, with CFA chief executive Michael Wootten unable to confirm if it will remain open after a two-week probe into the latest contamination.

"The future of the site is something we will work through after we determine whether the water at the site is safe," he said.

"We are currently conducting further tests across the site to check if there are residues at any other outlets, taps, shower heads."

Emergency Services Minister Jane Garrett said she was "deeply disturbed" by the latest contamination, and "can't imagine this site will ever operate again".

Emergency Management Commissioner Craig Lapsley refused to be drawn on the site's operational future.

"I'm not here to say Fiskville will close ... we have to let the process run a little longer," he said.

But Mr Lapsley said a new fire site in Craigieburn, which opened its doors last year, would bolster the network of eight training centres statewide.

United Firefighters Union secretary Peter Marshall said more officials within WorkSafe, the CFA and the former Coalition government must be held to account for systemic failures at Fiskville.

He said the discovery of contaminated mains water was the "latest chapter in this sorry saga", which has exposed firefighters to grave danger and long-term health implications.

"WorkSafe, the CFA and the Napthine government have failed to protect firefighters despite knowing that the water using in training firefightres sat on sludge so dangerously contaminated that it is illegal to move it from Fiskville without years of expensive remediation," Mr Marshall said.

"More heads will roll."

Environment Protection Authority chief Nial Finegan said the latest contamination at Fiskville was uncovered as a result of two clean-up notices from his agency in 2013.

The CFA had been ordered to appoint an environmental auditor, who recommended taking samples of drinking water, he said.

"The rigour of the independent auditor system overseen by EPA provides robust oversight and can give the community confidence in our work," Mr Finegan said.

Operations at Fiskville were downgraded in late 2014 after the parliamentary inquiry into the cancer cluster began. Long-running health fears held by cancer-affected firefighters and their families were confirmed in January with a Monash University study finding elevated rates of brain, skin and testicular cancers among more than 600 firefighters.

Sixteen firefighters have died from cancer and 53 have been diagnosed.

The government has confirmed WorkSafe's insurance business unit director, Clare Amies, will be appointed acting chief executive of the organisation.

TAC chairman and WorkSafe board member John Walter will be acting chairperson.