Asylum seekers were placed on the Bibby Stockholm barge at Portland Port the day after the Home Office was told about the discovery of initial results indicating that the Legionella bacteria was present, it is understood.
Samples from the water system showed levels of Legionella bacteria, the Home Office said. This bacteria can cause a serious type of pneumonia (lung infection) called Legionnaires’ disease.
All 39 - who only arrived this week beginning on Monday - were being taken off as a precaution.
It is understood Dorset Council told department officials on Wednesday evening about the discovery of initial results indicating that the bacteria was present, but the transfer of a further six migrants on to the barge still went ahead on Thursday.
Government sources said the UK Health Security Agency then told ministers on Thursday that Legionella had been found in the vessel's water system and advised them that they needed to remove those six migrants.
With a capacity of more than 500, the Government hopes that the use of the Bibby Stockholm, together with former military bases, will help reduce the £6 million a day it is spending on hotel bills for asylum seekers waiting for claims to be processed.
But the removal of the 39 people who had boarded the vessel has forced them back into alternative accommodation.
Around 50 people had been expected to move on to the giant vessel but around 20 were granted a last-minute reprieve after a series of legal challenges.
According to Sky News, immigration minister Robert Jenrick is understood to be chairing meetings about the situation.
Authorities stressed that no-one on board had symptoms of Legionnaires’ disease, and there was no health risk to the wider community.
The discovery prompted campaigners to call for the barge accommodation to be scrapped immediately and even for government resignations.
On Monday of this week, and after weeks of delays caused by safety concerns, local opposition and legal challenges, the first 15 asylum seekers boarded the barge.
A Home Office spokesperson said on Friday: “The health and welfare of individuals on the vessel is our utmost priority.
“Environmental samples from the water system on the Bibby Stockholm have shown levels of legionella bacteria which require further investigation.
“Following these results, the Home Office has been working closely with UKHSA and following its advice in line with long-established public health processes, and ensuring all protocol from Dorset Council’s Environmental Health team and Dorset NHS is adhered to.
“As a precautionary measure, all 39 asylum seekers who arrived on the vessel this week are being disembarked while further assessments are undertaken.
“No individuals on board have presented with symptoms of Legionnaires’, and asylum seekers are being provided with appropriate advice and support.
“The samples taken relate only to the water system on the vessel itself and therefore carry no direct risk indication for the wider community of Portland nor do they relate to fresh water entering the vessel. Legionnaires’ disease does not spread from person to person.”
After news on Friday that the bacteria had been discovered, Mayor of Portland Carralyn Parkes said: “My reaction is one of shock and horror.
“This is part of a long litany of disasters surrounding the barge.”
Stand Up to Racism called for the barge’s use to house asylum seekers to cease immediately.
Meanwhile, Steve Smith, chief executive of charity Care4Calais, said: “We have always known our concerns over the health and safety of the barge are justified, and this latest mismanagement proves our point.
“The Bibby Stockholm is a visual illustration of this Government’s hostile environment against refugees, but it has also fast become a symbol for the shambolic incompetence which has broken Britain’s asylum system.”
Meanwhile, Fire Brigades Union assistant general secretary Ben Selby said their fire and safety and operational safety concerns onboard the vessel, which he branded a "potential death trap", remain.
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