The council believes heavy rain in the catchment is causing discoloured household water at Marulan.
Residents have aired their complaints over social media about the discolouration. Council general manager Warwick Bennett acknowledged its appearance had caused distress for some of the community but assured people it met all Australian Drinking Water Guidelines and was safe to human health.
Nevertheless, to avoid 'potential' water quality problems, the council will draw the resource entirely from the Wollondilly River. Currently it is drawn from a combination of the river and underground bores.
"Levels of discolouration look to be low, however there is potential for changes in water colour over the next few days," a spokesman said.
Mr Bennett said the same problem occurred last summer after heavy rainfall in the catchment. The downpours typically create higher manganese levels, creating discolouration.
"We apologise for the inconvenience but want to assure people we are working to address it," he said.
He hoped it would settle down in a few days but staff would continue to monitor the situation and make changes accordingly.
Meantime, Mr Bennett told The Post the council was spending $9 million to upgrade the town's water treatment plant and $10m for sewage scheme improvements over the next two years.
Residents who do experience discolouration are encouraged to contact the council on 4823 4444.