Residents and visitors in Duvauchelle were being told to immediately stop using water for "non-essential activities".
Christchurch City Council said heavy weekend rain caused a water treatment plant to break down, resulting in murky water that could not be converted.
In a social media post, a council spokesperson said an increase of water tankers to the plant over the long weekend had not kept up with demand.
"Level 4 restrictions are being put in place immediately, which includes a total ban on outdoor water use," they said.
The Duvauchelle Wastewater Treatment Plant was built in 1988 and services a community of about 180 residents.
The plant has been upgraded twice in 1996 and 2002.
A new water treatment scheme that would discharge treated wastewater onto land near Akaroa Golf Course is proposed for 2029.
