Children missed school for sickness after swimming in a river Environment Agency staff said was "good enough to drink", a report found.
Campaigners in Ilkley, West Yorkshire, discovered that schoolchildren had suffered from gastrointestinal problems after swimming in the town's River Wharfe - now England's only designated river bathing spot - in 2018. Last year, the area was named the most polluted bathing site in England.
Professor Becky Malby, co-founder of the Ilkley Clean River Group, told MPs on the Environmental Audit Committee that Environment Agency staff claimed the water was "good enough to drink".
However, tests carried out by locals showed it was polluted by levels of faecal bacteria more than 30 times the safe limit for people to swim in.
A local GP had noticed a rise in the health problems but had not made the link with the river, she added.
Prof Malby told the committee: "We knew that kids were sick and missing school. We knew that local people who tend to swim, paddle and play downstream of the sewage works were getting ill in the summer.
"We did a bit of a campaign on Facebook to find out how often, and we had masses of responses."
Illegal sewage dumping rampant in rivers
Water companies have come under increasing scrutiny for pouring untreated sewage into rivers. Victorian-era systems have often not been upgraded, meaning they are now unable to cope with the volume of water.
The committee's report, published on Thursday, criticised water companies and the Environment Agency for becoming "complacent" about rampant illegal sewage dumping in Britain's rivers and "turning a blind eye" to the problem.
"Every community in the country should have access to waters — whether coastal or inland — that are safe for people to swim in without running the risk of falling ill," it said.
Professor Malby told The Telegraph she had since spoken to visitors picnicking and bathing by the Wharfe in an area downstream from a local sewage works, to draw attention to the health risks from pollution.
"We went down and told people: 'You do understand this is really polluted water?' And they said: 'We thought it was a waterfall,'" she said.
Official Environment Agency testing began last year, but only in one location upstream from the sewage works.
The Environmental Audit Committee report said real-time information about sewage discharges into rivers should be shared with the public "as a matter of urgency".
It also said signage should be introduced at bathing sites downstream from any water treatment works.
An Environment Agency spokesman said: “We welcome the Environmental Audit Committee’s recommendations and will respond in due course while continuing to work with industry, government and the wider public to protect our rivers, making the best use of the resources we have.”