A major chicken company has been fined $80,000 for spilling 1,700 litres of blood into a creek near Newcastle.

Inghams has agreed to pay the fine and fund water quality improvement works after it spilled chicken blood into Winding Creek.

The Environment Protection Authority (EPA) said the incident occurred when a poultry blood tank ruptured at Inghams Cardiff plant in May last year.

The rupture caused 1,700 litres of blood and small amount of offal to discharge into the surrounding area.

The EPA found that a blocked stormwater system caused the blood, offal and feathers to flow into nearby Winding Creek.

The authorities said the risk of long-term harm was low, because the chicken blood is biological in nature and will break down faster than other contaminants.

The EPA also noted that Inghams took swift action when it found out what had happened, and now has more robust monitoring, clean-up and preventative measures in place.

Inghams has given an enforceable undertaking to pay $80,000 to Lake Macquarie Council.

The council says it will use the money for the ongoing McNamara Creek Water Quality Improvement works, some of which are aimed at Winding Creek.

The company has moved to prevent similar incidents in the future, by unblocking its flush system, better separating clean and dirty water systems, covering stormwater drains and setting up sensors in the stormwater system.