Dunedin's main water supply may be safe to use earlier than predicted following fears it was contaminated.

Photo: 123RF

A fire that took hold near Middlemarch earlier this month, scorched through nearly 5000 hectares of grassland and into the Deep Stream Catchment.

The catchment usually supplies about 80 percent of Dunedin's water but it's been cut off with concerns firefighting chemicals and ash had contaminated the supply.

For residents on the hills of Dunedin, the Deep Stream and Deep Creek catchments are their water lifelines.

While Deep Creek is once again feeding into the city's water supply, Deep Stream is still unusable.

The Dunedin City Council initially said the supply could be out of action for up to a year.

The council's Network, Catchment and Maintenance manager Mike Perkins said samples taken from Deep Stream show that the chemicals in the water were below detectable limits.

The council was working with the Ministry of Health and specialists to develop a plan to safely start using the water again, he said.

"In the meantime, we are taking a cautionary approach and continue to take daily samples."

So far, the costs associated with the catchment concerns are about $60,000. That's come from the council's existing operational budgets.

"In terms of insurance, we are currently discussing with our insurance advisors what our options are."