The NSW Department of Primary Industries (NSW DPI) say they are looking into reports of sighted red spot disease in marine life at Lake Cathie.
Members of the Revive Lake Cathie have reported the sighting to NSW DPI, along with a number of fish deaths in the last week.
A spokesperson from NSW DPI said they are aware of the report but are testing to confirm it.
On the NSW DPI website, the department advises red spot disease is noted in fish kill reports. It is commonly associated with poor water quality.
They also advise affected fish are not to be consumed because they can pose a health risk.
Revive Lake Cathie president Danielle Maltman said the sighting highlighted the need for all levels of government to take immediate action and provide long term solutions for the lake's survival.
"We have ongoing concern for those who fish in the lake, as infected red spot fish do pose a health risk," Mrs Maltman said.
"We would like signs to be posted informing the community about the danger and more awareness about red spot disease.
"We want to future proof a healthy lake for generations to come and this needs to be done now."
Epizootic ulcerative syndrome (EUS) or 'red spot disease' is a disease that can affect many species of fish.
According to NSW DPI, in 2009 it was confirmed in Port Stephens and the Clarence River.
In 2011 it was reported and confirmed in fish from Fullerton Cove in the Hunter River and Salt Creek on the Murray River.
The NSW DPI website states that previous outbreaks of red spot disease have been associated with acid water run-off, prolonged cold temperatures, crowding, and conditions associated with drought.
Mrs Maltman again reiterated the need for long term solutions and a collaborative approach with all stakeholders.
"Since members of the Revive the Lake committee attended the 28th Annual NSW Coastal Conference hosted by the Central Coast Council in Terrigal last week, we have asked council for an urgent meeting to discuss some scientist endorsed solution for the lake," she said.
"We see this as a highly important meeting particularly given we have reported a handful of fish kills to council and NSW DPI in the last week.
"Now with the red spot disease at the lake, it is now a health issue for people and the wildlife around the lake.
"We are hoping that moving forward an open dialogue continues between all the major stakeholders and the community, so that we can ensure the lake has a long future."