A Centre for Food Safety test has found one of 10 noodlefish samples taken from retail outlets contained formaldehyde at a level of 600ppm.
The centre has sent a warning letter to the stall operator and is collecting evidence for prosecution. The stall has stopped selling noodlefish.
The centre said the formaldehyde is believed to have been added as a preservative after the fish were caught, or during transportation or storage.
The level detected is unlikely to cause adverse health effects. However, people who eat a lot of foods containing formaldehyde may have abdominal pain, vomiting and kidney problems.
Formaldehyde is not permitted for use as a food preservative and violation can lead to a maximum $50,000 fine and six months' jail.
