Emergency teams were called to the Leeds-Liverpool Canal in Churck Kirk after ‘two or three barrels worth of oil’ were found in the water.
The Canal & River Trust was called to the area to contain the situation after the oil slick was reported by a resident.
Gary Britland, 43, was walking his dog when he saw the ‘30 to 40ft’ oil slick in the canal and close to wildlife including geese and kingfishers.
He said: “I couldn’t believe it. It looked like at least two or three drums of oil had been thrown in.
“I could smell it and it was awful. It was a right mess and the wildlife was going to suffer.”
A trust spokesperson said: “We are unsure how the leak occurred but thanks to prompt action, the canal is now returning to normal.
“As soon as we received a call, our emergency team visited the site and arranged for a workboat with a boom to deploy to help contain the oil.
“This happened the following day and by this time the oil had dispersed a little and drifted down the canal.
“With the specialist boom equipment, our staff managed to contain the oil slick.”