The present invention succeeds to effectively deal with the problems associated with the treatment of the liquid waste (ie. "katsigaros" liquid waste) generated during the production of olive oil in traditional 3-phase olive mills. The method of the present invention may be used to effectively treat and manage the aforementioned liquid waste efficiently and environmentally-friendly and also produces useful by-products of substantial commercial value (eg. olive oil, solid fuel, animal feed, electricity, usable heat).