Hickman said in April, water quality testing carried out by volunteers showed E. coli Colony-Forming Unit (CFU) levels had reached 100,000 per 100ml.
She said anything over 900 CFU is classed as poor bathing quality, and as a result, the group put up signs warning people not to enter the water.
“The risk of infection at this sort of level was really quite substantial,” she said.
“The water course has got no signs of life.
“We found dead fish. We had real concerns for animal health.
“This is a stream that means a lot to local people, it’s a little gem.”
Southern Water said the burst main at the pumping station at Shorefield Road, Lymington was reported to it on May 1.
Hickman said that testing carried out earlier this week shows a “significant” drop in E. coli levels, which is “welcome progress”.
She said comparing Danestream to other water courses in the New Forest – some of which she says have “brilliant” water quality – is “particularly sad”.