Sydney's Coogee Beach, in the city's east, remained closed on Wednesday after lifeguards found the suspected "tar balls" washed up on the shore the previous day.
"Council is investigating the origin and composition of the material, which has the appearance of dark spheres," Randwick City Council said in a statement.
Beach-goers were advised not to touch the material amid a clean-up and investigation of the matter.
The material might be "tar balls", formed when oil came into contact with debris and water, the council said.
Such events were typically the result of oil spills or seepage.
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Randwick mayor Dylan Parker said he wasn't aware of recent oil spills nearby.
"If it is made of oil, it can be carcinogenic," he told ABC TV.
"We're strongly advising people just not to touch them."
NSW Environment Minister Penny Sharpe said Coogee was the only beach affected.
"It's an unusual occurrence … the other beaches are fine but we hope to get to the bottom of what is a pretty unusual situation as quickly as possible," she said.
Coogee Beach has been closed as authorities investigate mysterious ball-shaped debris. (Steven Markham/AAP PHOTOS)
The state's Environmental Protection Authority was working with the council to determine the cause of the wash-up.
Tar balls are small pieces of oil - often remnants of spills - but they can sometimes occur naturally from seeping crude oil.
They are commonly known to wash up on the Californian coastline from seepage on the sea floor.
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