A spokesman for the Brighton and Sussex University Hospitals NHS Trust said: 'Eastbourne General Hospital have had a major incident.
'Patients are being diverted away from Eastbourne unless they are from the Birling Gap incident.'
Symptoms including eye and throat irritation as well as vomiting and breathing problems have been reported.
The source of the haze is not yet known but lifeguards said it was 'possibly some kind of gaseous fumes'.
East Sussex's Chief InspectorBruce Mathews said the source of the cloud is as yet unknown and that this lack of knowledge is 'adding to our concern'.
He said: 'It's definitely coming from the coast. Initial reports were of a fire at Birling Gap, but there's been no fire.
'I know with previous incidents that we've had here there's been incidents where stuff has come across from industrial units in France.
'We're going to work with our agencies to try and find out where this has all come from.'
While the nature of the gas hasn't been established, East Sussex Fire and Rescue Service has advised that it is 'extremely unlikely' that it was chlorine, as was being suggested on social media.
Large queues formed outside Eastbourne Hospital as it tried to cope with the influx of hundreds of patients on Sunday evening - as the fire service asked people not to attend A&E unless absolutely necessary.
Hospital staff were seen wearing protective clothing as they checked patients over in decontamination tents.
One unnamed witness at the hospital said patients were hosed down and made to change clothes as an extra precaution, as a result of medics having no idea what the toxic substance was.
He told: 'They are hosing everyone down in case it turns out to be something really nasty.'
Chlorine was used 100 years ago during the 2nd Battle of Ypres in April 1915, where the gas was vapourised into a cloud.
It is classified as a 'choking agent', burning the lungs when inhaled in large quantities. But it is nowhere near as dangerous as nerve gases like sarin.
The element is readily available in Britain, used in swimming pools and decontamination in industry.
The RNLI said that 'possibly some kind of gaseous fumes' had drifted over the scene and a significant number of people on cliff tops had been struck down with symptoms including irritation, sore eyes and vomiting.
Fears from the coastguard that people could be trapped on the beach saw the RNLI launch all-weather lifeboats from Eastbourne and Newhaven to the Birling Gap area.
There was a doctor on board the Eastbourne lifeboat.
A spokesman said: 'We have been checking along the shoreline to try and ensure that everyone is safe.'
He said a 'plume' had drifted across the area bringing 'some sort of substance' with it which seemed to affect a number of people.
Rebecca Baldock shared a video from a car as she and her friends, Jacob Ward and Scott Smith, complained of streaming and burning eyes.
In the footage she can be heard saying: 'My eyeballs, my eyeballs.'
She told Mirror Online : 'We were on the beach in Eastbourne and we were just about to leave and all our eyes were itching and red.We couldn't see and we thought it was because we'd been swimming in the sea but as we got further towards the steps of the beach everyone was holding their eyes and there was a mist rolling in.
'The coast guard medics said it was a chemical irritant in the air and for everyone to get off the beach and out of the area as quick as.We used the medic centre to try wash our eyes but we all still have really red sore eyes.
'The medics recommended we washed our eyes out with cold water and said we could stay to wait for an ambulance but we wanted to get out of the area.'
A Sussex Police spokesman said: 'A "haze" that is causing discomfort for people along the coast from Eastbourne to Birling Gap has prompted emergency services to warn people to stay away from the beaches and to keep doors and windows closed if living near the coast.
The first report came from Birling Gap just before 5pm on Sunday where up to 50 people had been affected by irritation to eyes and throats.
'This seems to have been caused by an unknown haze coming in from the sea, but the source has not yet been established.'
They added that the vast majority of the gas appeared to have dissipated by later in the evening.
East Sussex Fire and Rescue Service called the ongoing scenario a 'chemical incident'.
Eastbourne councillor Kathy Ballard said: 'It is a matter of definite concern. We need to find out the cause, where did this come from and to make sure that steps are taken so that it does not happen again.
'I have not heard of it happening before in this area.'
With another fine day expected for Bank Holiday Monday, thousands of people are expected to flock to the south coast.
Sussex Police reassured holidaymakers they would continue to monitor the situation, but added that they believe Sunday's cloud was an isolated incident and is not expected to recur.
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