A boil water notice remains in place for parts of Queenstown, while other areas in the resort town have had it lifted.
The drinking water regulator, Taumata Arowai, says the council can lift the boil water notice for the area served by the Kelvin Heights plant, which means people living in Hanleys Farm, Kelvin Heights and the Frankton flats area can drink straight from the tap again.
However, the boil water notice is still in force for about residents served by the Two Mile plant, which includes the CBD, Fernhill, and Sunshine Bay.
There have been about 60 cases of cryptosporidium confirmed in the area in the past few weeks.
Queenstown Lakes' District Council infrastructure general manager Tony Avery said the change was effective immediately.
The fact the restrictions had not yet been lifted in the CBD and elsewhere was an ongoing concern, Avery said.
"We're working very actively with Taumata Arowai and Te Whatu Ora and public health and MPI [Ministry for Primary Industries] to try and track down the source."
Queenstown council in talks with Taumata Arowai over filter installation
Taumata Arowai has issued 150 compliance notices requiring councils and other organisations to install UV filters to treat drinking water supplies for microscopic parasites.
The upshot could be bills in the hundreds-of-thousands of dollars for authorities to fit them.
Taumata Arowai spokesperson Steve Taylor said at least 10 percent of the population could be drinking water at risk of such contaminants.
A list of public water suppliers which need to install barriers against protozoa and other parasites is expected to be published by Taumata Arowai on Thursday.
In Queenstown's case, Avery said that might mean the boil water notice had to remain in place in some parts of the region, even after the water was deemed to be safe to drink.
"The compliance order that Te Mata Arawai placed on the council requires us to have the protozoa barrier in place before the boil water notice can be removed. However, we are trying to work with them to see if there's any way we can get that lifted in advance of that."
It would be great to be able to point to a clear source but sometimes in cases such as this the source was not discovered, he said.
"It may be an episodic sort of event that happened at one point, that's caused the contamination. And most of the cases seem to relate back to a point in time prior to the boil water notice going in place."
There was the potential for businesses in the CBD having to boil their water until December, since currently even if the water was clear, the boil water notice could not be removed until the protozoa barrier was put in place, he said.
The council was working as quickly as it could to get the barrier in place, as well as having ongoing discussions with Taumota Arawai, he said.
"We fully understand the concerns and frustrations of the businesses and the residents in that area and a lot of the tourists and we are actually working with the regulator around that."
Avery said the council had a funding programme to upgrade treatment plants over time but upgrading for the barrier in question had previously not been scheduled until 2028.
So the work was programmed in but had not yet been done, he said.
"We're now moving at pace to sort that out, and we're moving at pace to also deal with the other main treatment plants at the same time to get the protozoa barrier in place."
The council had "debt ceiling issues" and had been upfront with residents about the need for rates increases to deal with the overall upgrades of the Water Services Reform Programme (formerly Three Waters) network, he said.
