The Central Otago District Council announced at 1pm it had removed the do not consume water notice in Roxburgh.
A council spokeswoman advised people the area to flush a tap for about one to two minutes before drinking water again.
"Thanks for your support to spread the message this morning while we worked hard to make sure we understood what was going on to resolve the issue quickly."
The Central Otago District Council issued a warning about 9am telling Roxburgh residents to not to drink water from the town's supply, even if it's boiled, because of an issue at its reservoir.
A council spokeswoman said it appreciated there was concern in the community about the water supply and for those who had consumed water this morning.
"We are working as quickly as possible to get further information for you and to resolve the issue."
She said sensors were triggered just before 8am at the reservoir, and it would have taken at least 30 minutes for the over-chlorinated water to have reached the town.
It believed upgrades being done on the culvert at Pumphouse Creek triggered a slug of chlorine to enter the reservoir.
"We understand anyone who drank water after 8.20 this morning will feel concerned.
Public Health South had advised it was more of an aesthetic (smell and odour) issue and there was a low risk to health from drinking the affected water over a short period of time.
In the meantime, the council advised using bottled water or water from tankers at Roxburgh Area School school and Roxburgh Medical Centre.
This applied to water for all drinking, making up formula, juices and ice, washing fruits and vegetables, other cooking needs, and brushing teeth.
Boiling would not remove contamination.
Schools, businesses and people on a vulnerable persons list had been contacted.
