Queenstown has been slapped with a water compliance notice and the District's Mayor admits the tourism hotspot's reputation is at risk.
The number of cases of cryptosporidium has reached 21 and in some places, locals will have to boil their water for months.
Queenstown's reputation is on the line, with a warning sent out on Tuesday night informing parts of the town may be under a boil water notice for months.
The country's water regulator has slapped a compliance order on the Council.
Part of that requires the Two Mile intake to upgrade to protozoa barriers which could cost millions of dollars.
"It's not just a matter of putting a little widget in the water line, it's some serious kit and there's some very stringent commissioning," Queenstown Lakes District Mayor Glyn Lewers said.
Kelvin Heights has a barrier in place but it needs to prove it's working and up to standard.
The Mayor believes that plant can be sorted in a matter of days.
"We really want that one up and running because that system actually feeds the hospital, the airport, our supermarkets and the school," Lewers said.
A total of 21 people have been confirmed as cryptosporidium cases since the first was identified earlier this week.
"There is no common food premise that they've all visited, there's no common recreational water or pool that they've all visited and they're not all from the farming community in fact they're all urban," Southern Medical Officer of Health Dr Michael Butchard said.
The source is still unknown but with the school holidays just days away there is concern it could be picked up and spread.
"We are expecting that some people have visited Queenstown that will pick up the infection and that they'll travel elsewhere," Butchard said.
An alternative water supply is being explored but health authorities are urging people to be thorough with hand hygiene and to use soap and clean water.
"Don't rely on hand gel, it doesn't work against this protozoa," Buthcard said.
The clock is now ticking for the Council to find what does work, to protect against parasites in its water.
