The Navy told state health officials it found diesel in a monitoring well under Tripler Army Medical Center, along with a trace amount of lead.
The new information came to light during a City Council hearing on a resolution calling for state health officials to act quickly to resolve a recent fuel spill at Red Hill.
An estimated 27,000 gallons of jet fuel were released from one of the military's underground fuel storage tanks four months ago.
"It is new information to us and the Navy, and it really heightens the concern that contamination in the groundwater may have spread," said Environmental Health Deputy Director Gary Gill.
"There could be an entirely different source of contamination at that Tripler monitor well. Either way, it's not good news," Gill said.
Meanwhile new pictures were released by the Navy of the inspection that is underway of underground tank No. 5.
State health officials said while the recent discovery still needs to be verified, they believe it underscores the need to move quickly to protect drinking water sources.