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Summer water restrictions in Luggate are likely to become a thing of the past, despite more people moving into the area.
Drinking water in Luggate is now sourced from two bores near the town centre.
Queenstown Lakes District Council three waters strategic adviser Catriona Lamont said the council had been investigating a new water source to replace the two town bores and was optimistic one had been found on Department of Conservation land near the Red Bridge.
It was hoped to start deep drilling next month followed by water testing to determine the quality of the water and whether the yields would meet the demand, she said.
"In March or April we will be checking the results and the engineering design will start after that."
The council had already secured consents from the Otago Regional Council to carry out the water testing and permission from Doc to use land at the end of Church Rd on which to build three sheds and a water treatment plant if required, she said.
Iwi and local landowners had also been informed.
Ms Lamont said two bores would provide redundancy in the network and be sufficient to meet the demand but the council had been given enough Doc land for a third bore.
The bore site was in a natural location which should result in better water quality for the town, she said.
This time last year the council issued a water restriction notice to Luggate residents, prohibiting use of sprinklers, irrigation, and outdoor watering systems.
This summer no specific water restrictions have been issued for Luggate residents, but in December the council asked residents across the district to "monitor their personal usage as the warmer summer months approach" to avoid water restrictions being introduced.