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Mandatory testing of the Arrowtown water supply has shown low-level E. coli contamination, and residents are advised to boil their water for at least the next three days.
Queenstown Lakes District Council communications manager Meaghan Miller said the contamination was probably caused by recent heavy rain.
''We have found a connection between heavy rain and E. coli events. We have had that happen before about a year ago under similar circumstances.''
The Arrowtown supply is separate from the Queenstown supply and is sourced from a bore.
While Queenstown's water is chlorinated, Arrowtown's is not but has temporarily been chlorinated because of the E. coli result.
Ms Miller said some people might not be comfortable drinking it and recommended bottled water as an alternative to boiling.
Though the Arrowtown community wanted to remain with non-chlorinated bore water, Ms Miller said funding in the 10-year plan had allowed for UV treatment from an undetermined date next year.
This ''alternative solution'' would likely ensure issues such as the E. coli result would not arise.
Ms Miller said the boil-water notice would be lifted after the council had received a clear result for three consecutive days.