"This time, that period of grace is over and we'll act on complaints and on observations and give a final warning if needed.
"We'll be leaving some information in their mailbox, giving them a pamphlet about how to improve things to clear the air, telling them about the subsidy and giving them a three-month deadline to comply."
If the breach continued, the residents could receive an infringement notice of $300 for each day the offence continued, Mr Donaldson said.
Excessive smoke could be caused by burning wet wood or household rubbish in burners, but usually the problem was non-complying, inefficient burners.
A subsidy is still available to residents of those towns to fit a clean-heating appliance, under the council's Clean Heat Clean Air programme, but the current level of subsidy is only available until October 31.
Council environmental information and science director John Threlfall said domestic heating had been identified as the main cause of air pollution in Alexandra, Clyde, Cromwell and Arrowtown.
All four towns had recorded breaches of the national air quality standards this winter, but monitoring showed Clyde had fewer breaches than usual and Arrowtown's peaks were not as high, but Cromwell and Alexandra were "neck and neck" as the towns with the most air pollution days.
The climate also played a role and the number of inversion days had to be taken into account, Dr Threlfall said.
The national standard set a daily average threshold of PM10 (tiny airborne particles) of 50mcg per cu m of air, with only one exceedance permitted a year.
By the start of this week, Alexandra had exceeded that figure 21 times this year, Arrowtown 10 times, Clyde three and Cromwell 12.
"There's a whole lot of work still to be done to reach the national standards, but it's very difficult to meet those standards if everyone uses solid fuel burners and some people are still burning coal. If we could get rid of coal burners, that would make a difference," Dr Threlfall said.
He was aware how popular solid fuel burners were in the district "and its obvious why - they want to stay warm".
Meetings would be held in the towns at the end of winter to talk about air pollution.
There was no easy answer to the problem but it could not be ignored and the council was responsible for implementing the national air standards, he said.
Fines would be imposed on those "blatantly flouting the rules".
The health effects of air pollution were well documented, he said.
Environment Southland cleared up confusion this week around its ban on the installation of open fires in Invercargill and Gore homes.
The regional council's environmental information manager John Prince said the ban applied only to new, solid fuel open fires, not existing open fires. The ban came into effect on June 4 in Invercargill and on June 29 in Gore.
The city and town were targeted because they regularly breached the national air quality standards.
