A leaking pipe from McCain could have contributed to a Scarborough landslip.
The news comes as four more homes are recommended for demolition at Knipe Point, overlooking Cayton Bay.
A report, commissioned by residents and carried out by consultants Ashton Bennett, concludes that the most likely cause of the landslips is “water leaks” rather than a deep-seated landslip.
It states: “The test results of the water issues and the effluent from McCain’s factory within Yorkshire Water pipes indicates that leakage of effluent within Yorkshire Water pipes is the most likely source of the water issues.
“This is confirmed by the lack of water issues since the relaying of Yorkshire Water pipe work north of Knipe Point.”
Malcolm Pirks, chairman of Knipe Point Residents’ Association, said: “This confirms our worst fears.”
He explained that the report had been passed to residents and copies sent to McCain and Yorkshire Water.
Mr Pirks said: “McCain got back to us and said they’d be in touch, but we didn’t hear back from Yorkshire Water.
“We just want to listen to what they’ve got to say.”
Following Monday’s landslip, which left four properties perilously close to the edge, he added: “It’s so worrying for people that live there - I’m only four doors away.
“You don’t know whether you’ll be here next year or even next week.”
Mr Pirks continued: “We’ve known all along it wasn’t a natural thing. We’ve been monitoring it from day one and seen water running from 9.30am to 1.30m.
“McCain have been very obliging so far, but now the situation is much more urgent than it was.”
Artist Kane Cunningham, who bought a cliff-edge property as a studio and art project, said: “McCain is a world famous brand with a strong ethical and environmental policy on protecting the environment.
“I feel they have many questions to answer and indeed should act fast and responsibly, to meet the residents and to help resolve the crisis.”
He added that when his house is pulled down, he plans to use the rubble to make sculptures and new artworks.
Scarborough fishermen are also asking for answers from Yorkshire Water about exactly what is flowing out into the sea.
Bob Roberts, a spokesman for Scarborough Fishermen’s Society, said: “The fishermen have been concerned about it for years.
“You hardly see any fish between Filey Brigg and Whitby - it’s barren and there’s a smell of ammonia.
“We’ve been in touch with Yorkshire Water and had letters back saying they’re dealing with it.
“But I believe everyone is dodging the issue.”
Bill Bartlett, corporate affairs director at McCain, said: ““Like everyone else in Scarborough, we are well aware of the longstanding geological issues at Knipe Point.
“We employ around a thousand people in the area and throughout the four decades we have been here we have always played an active and responsible role in the community.
“As part of this commitment we have participated constructively on a voluntary basis in past authoritative studies which have concluded that inherent and unstable geological conditions at Knipe Point are the most probable reason for the issue.
“We have only received a copy of the new document from the Knipe Point property owners in the last few days and, as we always take community representations seriously, we have asked geological experts to assess the document’s contents before commenting further.”
A spokeswoman from Yorkshire Water said: “We have been in contact with some residents of Knipe Point Drive and we’re aware of the independent report commissioned by the Knipe Point Residents Association, dated December 2012.
“Due to the length and high level of technical information in the report, we have not yet been able to fully consider it.
“We will however look closely at the findings and respond to the residents as soon as possible.”
Scarborough Council engineers and the North Yorkshire Building Control Partnership are in the process of contacting the owners of the four at-risk properties about demolition.
Two of the four would be eligible to benefit from a share of the £1m Pathfinder funding secured by the council to allow homeowners to build somewhere new.