ODA chief executive David Higgins said: "Although the Spitalbrook site investigations are still continuing, the initial results indicate that the cost of cleaning up the land for this venue would be prohibitive given budget and time restrictions.
"We will continue to look at the Spitalbrook site but it is prudent to develop robust contingency plans at this stage."
The original venue plans for Spitalbrook were based on investigation documents that identified the site as having a low risk of contamination.
However, further site investigation work led by the ODA in partnership with the Lee Valley Regional Park Authority and the Environment Agency subsequently found evidence of contamination across the area, including hydrocarbons such as petrol and diesel and tar products, believed to have come from previous light industrial use on the site.
The Spitalbrook site also lacks a layer of clay beneath the surface to act as a natural barrier, and the Agency has concerns that construction on the ground above this risks contamination leaching across the site.
"We have a very challenging timetable and it is important to take swift action when presented with problems," added Higgins.
"Venue designs continue to be developed so that a planning application can be submitted once the site discussions are completed. We are on track to complete the venue for test events in 2011."
The site at Spitalbrook was due to be transformed into a permanent 300m competition course and 100m warm-up course, with 12,000 seats for spectators.
If the ODA decides to re-locate the venue, a case will then be presented to the International Canoeing Federation and the International Olympic Committee.
Both bodies would need to give their approval before the new site could be confirmed. This is likely to happen by the end of the year.