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Last Friday the Queenstown Lakes District Council said people should avoid swimming and recreation at Lake Hayes after water testing at the lake's northern end showed levels of E.coli more than four times the acceptable level.
Government water quality guidelines for recreational swimming areas state water with more than 550 E.coli per 100ml indicate a potential health risk.
The sampling at Mill Creek Shallows showed levels at 2420 E.coli per 100ml.
This week the council said results from further testing of water quality at Lake Hayes showed the elevated E. coli levels had subsided.
The area is now safe for swimming and warning signage is being taken down.