A draft bylaw rewritten to deal with the issue was released this week, after investigations into the issue that began in April.
Council water and waste services manager John Mackie said yesterday residents had been coming forward to find out about the issue, after publicity during the year.
The situation emerged after council staff confirmed they were investigating "suspect" connections involving properties with informal or illegal connections.
Staff calculated about 800 properties were connected to the council water supply despite being outside designated supply zones and prohibited from connecting under the existing bylaw.
Many were in rural areas and paying a variety of charges, but the number also included about 20 properties not paying anything, fewer than the about 50 understood to be in that situation earlier in the year.
Mayor Dave Cull owned up in June to being one of the property owners, having not paid water rates since purchasing his Portobello home 15 years ago, though he alerted the council to the situation two years ago.
The bylaw has been rewritten in order to deal with the problem, and was released this week for consultation.
Mr Mackie said the bylaw had, until now, included a section saying connections outside set boundaries required a "special consultative procedure" to be formalised.
"We had to go through a horrendous procedure to change a line on the map," he said.
That section had been left out of the new bylaw, meaning staff could formalise connections without going through that procedure.
The council was about to send letters to affected homeowners to gather information on their connections.
Mr Mackie said in many cases there were no records of arrangements made with old county or borough councils and, with properties changing hands, it was difficult to get to the bottom of historical arrangements.
In situations where there was no evidence of authority to connect, or where a connection was "deliberately illegal", disconnections could take place.
However, the council would consider "natural justice and hardship" issues, and there would be a process to formalise connections.
The bylaw also allowed bills to be backdated, but only 12 months, with the annual water charge $383.
Little was likely to happen until after hearings. The bylaw comes into effect in April next year.
Submissions on the draft bylaw are open until January 28.
