The Gold Coast City Council may face prosecution after the state government announced it would investigate the "catastrophic failure".
The broken pipe is believed to have dumped effluent into the Albert River at Yatala for up to three months, believed to be the state's worst-ever leak.
"We haven't seen a spill of this magnitude in Queensland to my knowledge," the Department of Environment, Science and Innovation (DESI)'s Brad Wirth said.
DESI said it would investigate the council, who they named as the "polluter".
"This could result in enforcement action against the council, including a statutory notice and prosecution," a department statement said.
It was first notified of the spill on April 9.
But three days later the council provided an update, telling the department the sewage leak was much worse.
It is believed raw effluent spilled into the river between January 12 and April 12, leaking three to five million litres a day.
"On April 12 council advised DESI the spill was far greater than originally reported and may have occurred continually for far longer than first reported," the department said.
DESI said the probe would examine how quickly the council was notified of the health risks and their culpability in terms of how they are managing their sewage network.
It will also look at the extent of environmental harm caused.
The council on Wednesday said it understood the seriousness of the incident and had organised an engineering firm to complete an independent investigation.
The council's Michael Kahler said water quality tests over the past fortnight had shown the Albert River was safe for recreational use.
"During the three months of the spill, we had no identifiable fish kills or adverse environmental impacts come to light," he said.
"This does not mean there have been no impacts, but now we need to focus on what the science tells us."
The council last week issued a statement saying the state government had recommended seafood caught in the Albert River not be consumed until further notice.
Local prawn farms had also reportedly been forced to stop their operations.
Mr Kahler on Wednesday said more test results should be available by the end of the week.
"These results should inform if the recommendation around eating fish can be lifted and if there were identified impacts on the seafood industry operating out of the river," he said.
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