The outbreak, which began last month, has led to more than 61 cases of the gastro-bug in the resort town.
Te Whatu Ora-Health New Zealand issued a statement yesterday that said it had concluded the most likely source is human faecal contamination of the water supply.
Medical officer of health Dr Michael Butchard said health experts had examined all the information gathered by authorities since the outbreak began. This included analysis of the outbreak’s epidemic curve, detailed case interviews with affected people, genotyping of samples, geo-spatial analysis mapping of cases, and ongoing water testing, he said.
"Based on all the gathered information to date, our most likely hypothesis is that the outbreak started through human faecal contamination of the source water in Lake Wakatipu, which has then been collected into the Two-Mile water treatment plant’s intake pipes, then got into the water reservoir," Dr Butchard said.
"From there, it has then been distributed around the Two-Mile water distribution network to homes and businesses, most likely over a number of days."
It means a boil water notice will continue to remain in place as Queenstown Lakes District Council (QLDC) works to put in place protozoa barriers at its Two-Mile water treatment plant, following direction from drinking water regulator, Taumata Arowai.
Dr Butchard said while water testing had not shown any positive results for crypto, testing was not always conclusive.
Most of Queenstown has been on a boiled water notice since September 18.
"We know the boil water notice in particular, along with other public health measures, has been very effective in halting the spread of crypto, and we thank everyone across the community who has played their part in following the advice to help limit the spread," Dr Butchard said
"However, crypto is still very much present in the community, with a high risk of re-infection and person-to-person spread."
QLDC property and infrastructure general manager Tony Avery said the council had engaged with both Te Whatu Ora and water regulator Taumata Arowai.
"We have always accepted that the water supply could be the source — ongoing negative test results do not exclude it — and so having it identified as the most likely, while disappointing, is not totally unexpected," Mr Avery said.
Areas still under a boil water notice include Queenstown town centre; Gorge Rd out to and including Industrial Place; Fernhill; Sunshine Bay; and Queenstown Hill above Frankton Rd out to and including Goldridge Way and Goldrush Way.
"We acknowledge the ongoing impact this will have on businesses, residents and visitors to the affected areas," Mr Avery said.
"Our focus remains on completing work at our Two Mile water treatment plant as soon as possible."
Restaurant Association of NZ chief executive Marisa Bidois said it had not been easy for its Queenstown members to respond to the boil water notice.