NSW Health documents obtained by the ABC reveal areas where deadly pathogens are regularly detected at dangerous levels in unfiltered drinking water pumped from rivers, lakes and dams.

The water safety reports, obtained after a lengthy freedom-of-information battle, also show more than 100,000 NSW residents were issued protective boil-water alerts in the last five years.

Grafton, Kempsey, Scone, Jindabyne and Bega are cited as the five worst-performing areas, with repeated "contamination incidents" triggering "potential health risks".

Around Grafton, a population of 40,000 are at risk from cryptosporidium, a parasite that causes gastrointestinal illness.

Residents have faced 10 boil-water alerts since 2006, issued "in response to the inability of the water supply system to manage risks".

The documents say faecal contamination from cattle, and even swimmers along the lower Clarence River catchment, is the parasite's source.

Faecal contamination from cattle and swimmers is feeding the parasite along the lower Clarence River catchment. ( ABC North Coast: Samantha Turnbull )

Similar problems plague the Bemboka River catchment, near Bega, with four boil-water alerts issued by Bega Valley Council in 10 years.

Deadly bugs originate in "onsite sewerage system discharges", "failures and presence of septic systems" and from dairy farms upstream.

The documents say "chlorine-resistant pathogens" — not killed by chemical treatments — are a threat to more than 40,000 people.

Around Kempsey, the risk identified is cyanobacteria — a toxic blue-green algae that can shut supply for 15,000 residents.

Grazing dairy cattle and raw sewage discharges near the Steuart McIntyre Dam trigger algae outbreaks here.

Alarmingly, the documents say "all pathogen groups" including e. coli are present in Kempsey water, and that a further "vulnerability assessment" should be undertaken.

Raw sewage discharges can cause algae outbreaks like this. ( Supplied: Blue-Green Algae Team )

In the Upper Hunter, more than 6,000 residents in Scone, Murrurundi and Aberdeen are rated at "very high risk" from dangerous pathogens flowing from an abattoir and septic tanks in the catchment.

The alpine towns of Jindabyne and Barry Way also face a "moderate risk from the presence of cryptosporidium" as well as toxic "blue-green algae" in their catchment.

Livestock faeces, and sewage, including from the Perisher ski resort are blamed.

The documents also identify other communities with one-off water concerns.

Last year boil-water alerts were issued in Dubbo, as well as villages including Toomelah, Gravesend, and Jubullum.

Billion-dollar filtration would improve rural water

The documents say the use of filtration systems would lift rural water supplies up to a standard enjoyed by large cities.

Many country councils supply unfiltered surface water, taken from watercourses, lakes or dams and treated with chlorine or UV disinfection.

But the documents reveal this simple approach is increasingly ineffective against resistant parasites, such as cryptosporidium.

The cost of introducing filtration across rural NSW is estimated to be in the order of $1.5 billion to $2 billion.

The documents also reveal a letter from Kerry Chant, the state's chief health officer, to Gavin Hanlon, an executive in the Department of Primary Industries, warning that many unfiltered supplies would not meet Australian drinking water guidelines.

Dr Chant warned that in overseas incidents major waterborne outbreaks of cryptosporidiosis showed "the majority of consumers in a supply system became ill", and urged a whole-of-government approach to devising and funding local solutions.

The spokesperson says that since 2012, $7.3 million dollars has been invested in programs to improve drinking water quality.

A NSW Health spokesperson told the ABC it took health risks very seriously and worked closely with the water section of the Department of Primary Industries to make sure "health risks are assessed and effectively managed".

"Ultimately, it is the responsibility of local water utilities to provide safe drinking water to their consumers."