Former deputy state services commissioner Ross Tanner investigated the council's handling of the incident.
His report is to be discussed by councillors next week.
One major problem highlighted by Tanner was the failure of staff in the council's Three Waters department to tell senior management about the situation that had been developing for weeks.
Chief executive Sandy Graham did not know about it until the day before residents were told on February 2 they should not drink the water.
Dunedin Mayor Aaron Hawkins apologised for that.
"We accept the presence of elevated lead levels should have been escalated sooner, which would have allowed us to have this very serious conversation with our community sooner, as they deserved," Hawkins said.
"This delay caused avoidable angst for our communities."
A series of problems arose from the original testing being carried out to check on asset corrosion and the potential for health implications from test results not being adequately grasped by the council.
"They did not have a proper response plan or procedures in place to deal with whatever results they might receive from the testing," Tanner said.
One delay resulted from over-reliance on a staff member who was on leave in December 2020 when a worrying test result arrived in their inbox.
However, Tanner observed the council's response was in several ways exemplary from about February 2.
Testing protocols were changed and increased.
Alternative water supplies were set up.
A public meeting led by Waikouaiti Coast Community Board chairman Alasdair Morrison was well received, given the unsettling circumstances, Tanner said.
Health authorities ensured residents had their blood tested, which gave reassuring results.
Ageing pipes were replaced in Waikouaiti.
Residents of the three communities received vegetables without charge.
In the end, health officials established resumption of the water supply could be achieved safely.
The welfare response stood as a positive example of what could and should be done if other councils faced a parallel situation, Tanner said.
"My overriding perspective of the planning, preparation and implementation of the response and recovery is that it has been very thorough, and indeed impressive."
He noted the detection of lead in the water was in some ways unprecedented in New Zealand and that resulted in a lack of preparedness from even health officials.
Some concern has also been raised about plumbing standards in New Zealand.