The object, around seven metres long, was discovered during a routine sonar survey on Saturday with video footage also captured by a Remote Operated Vehicle (ROV).
Captains have been asked not to anchor within 1,000m of the weapon until a team of Royal Navy divers from Faslane inspect the site.
They are due in Orkney later this week and will examine the ROV footage before deciding the best course of action.
The Martime and Coastguard Agency said the suspected torpedo poses no immediate danger.
Bev Allen, duty controller for the UK Coastguard, said: “Until the Royal Navy divers have had a chance to examine the footage and the object we are asking that vessels and divers keep at a safe distance and follow the instructions of the Harbour Master and the UK Coastguard.”
Scapa Flow was used as a Royal Navy base in both world wars and allowed a quicker response to German fleet based in the Baltic Sea,
It is now popular with divers due to the British and German relics lying on the seabed.
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Meanwhile, Orkney residents will soon benefit from upgraded air travel after Loganair revealed the first overhauled aircraft in its Saab 340 fleet.
It comes as part of the airline’s £3.5m renewal programme.
Named The Spirit of Orkney in tribute to Loganair’s long island service, the aircraft will offer comfier seats, more leg room, LED lighting, less vibration and new carpets.
Loganair chairman David Harrison said: “Our engineers and support teams put an incredible amount of time and effort into the project, and I’m certain our customers will appreciate their endeavour and enjoy the comfort benefits the renewal project brings to the Saab 340 fleet.”
Minister for Transport and Islands Derek Mackay said: “I’m pleased to see Loganair investing in the fleet that serves our island communities. The upgrades they are making to their aircraft will improve the passenger experience, offering those on board greater comfort and convenience.
“Loganair has embarked on a significant programme of improvements, including engineering support, and is making significant investment in new planes and the existing fleet.
“This is another welcome step in that process and I hope passengers will start to see the benefit of this investment as soon as possible.”