Thames Coromandel District Council has apologised to Thames residents following a number of complaints about an "unpleasant taste" in the town's water supply.
Complaints have been lodged with council since late last year with reports of an organic or dirty taste in tap water.
In monitoring the water supply, council contractor Veolia found sedimentation and organic growth in the deeper layers of the Thames raw water pond, believed to be responsible for the taste.
While the pond has been scheduled for cleaning, council water services manager Bruce Hinson said there was no health risk from drinking the water supply.
"Once we'd dropped the level of the pond low enough we were able to confirm the level of silt and sedimentation present in the pond that can contribute to an increased level of organic growth," Mr Hinson said.
The cleaning work will be funded from council's operational budget and will be started as soon as a price and methodology are confirmed by staff, according to Mr Hinson.
"We'd like to apologise to residents who've experienced this problem," he said.
"It seems that some areas of town have been more affected than others, and in certain areas we have managed to lessen the effect by increasing the level of network flushing we undertake. By addressing the sedimentation levels in the raw water pond, we anticipate an improvement across the entire network."