The Central Otago District Council confirmed yesterday contractors had fixed the hole which was causing the Bridge Hill catchment to drain.
The dam had lost about 2m of its depth during the past "two or three years", neighbouring residents said.
Earlier this year, a contractor had been engaged to apply a polymer-based product to the western end of the dam, which had been observed as the area of the leaks.
A council spokeswoman said the hole was located when the dam was empty.
Contractors dug through the mud layer to expose the hole, which was then filled with a gravel and clay mix and compacted, council said.
Further protective material was laid over the hole and along the base of the dam wall before the water was turned on again.
The council confirmed water was turned on to Lanes Dam last week.
"It is now filling at a good rate with no evidence of the previous water loss."
However, council parks and recreation manager Gordon Bailey did not rule out further leaks.
"Because it is such an old dam, there may be other smaller undetected leaks. We will continue to monitor the water levels to see how it holds," he said.
