Council bosses say it would have cost millions of pounds to remove waste from the former Alex Smiles site - as they defended themselves from political criticism over last night's massive blaze.
The move comes as police issued health advice urging residents to stay inside and keep doors and windows shut.
Liberal Democrat councillors were quick to question why the site had not been cleared since the collapse of Alex Smiles more than two years ago.
Ward member Coun Andrew Wood said: "I will be pressing for answers as to how this fire hazard was left unremedied for so long, and what lessons can be learnt from it to prevent such a serious incident in our city centre in the future.”
And Lib Dem leader Coun Niall Hodson added: "A Freedom of Information request from the Liberal Democrats revealed the safety risks to the public of this neglected site over two years ago – and the response from the Environment Agency specifically pointed to the risk of fire.
"I’m not convinced we’ve seen sufficient action from the council or the Environment Agency to get the site cleared, and frankly it’s disgraceful given the number of years that have elapsed with this neglected and dangerous waste dump in the city centre. We need some answers urgently about how this was able to happen."
But Deputy Council Leader Coun Michael Mordey hit back at their comments: "The Alex Smiles site was abandoned when the business went into administration, leaving behind thousands of tonnes of waste that would cost millions of pounds to remove," he said.
"Despite having no quick or easy means to intervene in these circumstances, the council and the Environment Agency have been working together on a plan to bring the site back into use.
"Responsibility for the site does not sit with Sunderland City Council, it sits with the former owners’ pension fund.
"The City Council and the Environment Agency have been working hard to find a creative solution to the problem left behind by the site owners when their business failed. It is worth bearing in mind the massive financial burden on public finances this has created and also the failings within the legal system which has meant that no one can be held accountable for what is quite frankly shocking behaviour.
"The responsibility for this lies absolutely with the people who created the problem and it is wrong for anyone – including opposition councillors – to try and suggest that either the council or the Environment Agency are to blame.”
Firefighters are expected to remain at the site until at least tomorrow.
"We’ve been working with our partners including the Fire Service, the Environment Agency, Northumbria Police and Public Health England on the response to the fire since it started on Monday evening," said Coun Mordey.
"We are continuing to closely monitor the situation, including installing air quality equipment to monitor the smoke from the fire."
Residents in areas affected by smoke are being urged to stay indoors and keep their doors and windows shut. Anyone with respiratory problems should keep their medication to hand.
Drivers passing through the smoke have been advised to keep their windows and air vents closed and air conditioning off.
Anyone with any concerns should contact their GP surgery or call 101.
*Thanks to Brian Prest for the drone footage.