The gorge has been closed since mid-April and NZTA regional transport systems manager Ross I'Anson said the slip was likely to have come down over the weekend during the rain.
"This illustrates how prone the gorge currently is to slips due to the substantial movement recently measured in the hillside.
"The area is highly unstable and the Transport Agency is warning people to stay away from the slip site and not to proceed beyond the locked gate at the entrances to the Gorge."
Ms Collis said they needed to do all that they could to ensure traffic flow through Woodville and she would be contacting businesses to make sure they were all okay.
Ormond St Motel owner Joy Barnes said the news was pretty deflating but an optimistic approach had to be taken.
"It is not a good sign but there is nothing we can do so we have to keep going and hope for the best."
Ms Barnes said she wouldn't be able to tell the full effects of the closure until they hit peak season starting in September.
"It has been quiet and we had our quietest weekend for the year last weekend but I guess you expect that as it is winter and the school holidays were coming to an end."
The Store owner Rhys Punler, who is situated on Gorge Rd just prior to the Manawatu Gorge entrance, has seen a huge decline in customers.
Mr Punler said the sign which read "road closed ahead" was too far away from the gorge itself meaning customers never made it to the store and Bridge Cafe situated next door.
"Customers often call us asking if it is okay they come down to us and if we are open as they think our road is closed. We just need people to know that we are open and don't have any plan of closing."
Despite the situation Mr Punler said both his store and the cafe would remain open and they wanted to become a one-stop destination place.
Geotechnical engineers were reviewing the new slip and hillside above the slip.
Mr I'Anson said motorists should continue to use the alternative routes of Saddle Road and the Pahiatua Track, which were currently undergoing intensive maintenance to provide a better service to the Ashhurst and Woodville communities.
The Transport Agency was also working on solutions to issues raised by the public in meetings last week, about the impact of the gorge's closure in those communities.