CAIRNS City Council is considering legal action after analysing water samples containing possible run-off from the Reef Cove development site on False Cape.

Environmental Protection Agency and council officers visited the site last week after claims by green groups of erosion and sediment problems.

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The claims were graphically illustrated with images collected by the activists and published by The Cairns Post.

A council spokeswoman said the full results of the study would not yet be made public as they could form part of a legal action.

"There was dirt and soil in the samples, found to be at higher levels than water found further upstream," she said.

An EPA/QPWS spokeswoman said agency and council officers identified areas on the site where erosion and sediment control should be improved.

"The EPA will continue to assist the council in gathering evidence and further inspections will be carried out to ensure erosion control measures are effective," she said.

A spokesman for construction company CEC declined to comment, but last week said it would co-operate with any investigation.

The Reef Cove development is currently under a cloud, with building stopped while the MFS group battles to fund the project.

Project developers say they have been relying on media reports to obtain information from the MFS group.

Reef Cove Resort general manager George Czaus said the company had not heard anything from MFS since news broke of MFS's problems in mid-January.

"We were assured then funding for our project would be resumed but since then we have heard nothing," a frustrated Mr Czaus told The Cairns Post yesterday.

The developers advised all contractors to stop work on Monday because of the MFS funding freeze.

Mr Czaus said Reef Cove was looking at alternate financial sources should the MFS financing deal topple over.

"Had we known it (the freeze) would continue this long, we would have moved quicker to find another financier," Mr Czaus said.

He said the company was fully committed to continuing with the resort at False Cape.