Contractors working on the Otago Regional Council's flood protection scheme discovered the shell buried about 1m deep yesterday afternoon, beneath a bridge on the University of Otago campus.
Police were called to the scene about 12.30pm.
A police spokesman said the area where the mortar was found was cordoned off.
Police had informed the Christchurch-based NZDF explosive ordnance disposal team and were awaiting its advice.
''The shell does not pose any danger, but there will be a security presence overnight and the public are asked to stay away from the area,'' he said.
The area had been secured, and the university's Campus Watch team was assisting.
Otago Regional Council director for stakeholder engagement Sian Sutton did not comment on whether the contractors would change the way they worked in the area, saying all due process was being followed, and it was a police matter.
Old mortar shells were also found at a building site on Clyde St in July.
The shells were found to be empty and deemed scrap metal.
At the time, police were unable to comment on why the shells might have been there, but said they were ''historic''.
The University of Otago and Downer contractors declined to comment yesterday.
