Elevated lead levels had been detected intermittently at some sites since July last year - including one reading from December that was about 40 times the level considered acceptable - but the January 2021 reservoir result was of particular concern.
Residents are still advised not to drink the water and the Dunedin City Council has been unable to find the source or sources of the problem, though it has been replacing old pipes.
Director general of health Dr Ashley Bloomfield said the overall finding of the ministry's rapid review was that the public health risk assessment and response was timely and appropriate, "particularly around informing the community and undertaking lead screening".
"I am satisfied the timing of the advice to the community to stop drinking the water was appropriate."
Public meetings at Waikouaiti were well received and blood tests helped determine residents' overall exposure to lead, he said.
"Less than 40 people were found to have lead exposure above notifiable levels and on further assessment, many were found to be higher than normal due to other environmental factors."
Associate Minister of Health Dr Ayesha Verrall said the actions of health agencies resulted in the risk to the public's health being reduced.
"New Zealanders have every right to expect that their drinking water is safe," Verrall said.
"I'm pleased the overall finding of the report showed that the health response was timely and appropriate.
"The report, however, made several recommendations to reduce the chance of this happening again.
"They include improvements to several areas in the current and proposed regulatory framework for drinking water, such as better reporting by water suppliers and a review of the process for public health units to access expert advice."
Verrall said the report included recommendations for Taumata Arowai, the agency that will regulate drinking water nationally from July 1.
"While it was out of scope, the reviewers also raise concern with New Zealand's plumbing standards. I have passed this on to the Building and Construction Minister Poto Williams, who will follow up on this," Verrall said.
The East Otago water supplies had six readings that were above the maximum acceptable value for lead before February, but none since.
The review was carried out by Dr Heather Uwins-England and Dr Jill McKenzie.
The recommendations include:
• Improvements to the reporting of maximum acceptable value exceedances by laboratories and drinking water suppliers
• Advising suppliers to review their internal processes to ensure all sampling results are reviewed, and any adverse findings reported and acted upon immediately
• Setting the expectation that suppliers take the necessary remedial action when an exceedance occurs
• Recognising a safe drinking water plan and risk management plan are as important as compliance
• A review of the process for public health units to access expert advice
• Review plumbing standards with regards to allowable lead levels in imported tapware and fittings
• Improvements to plumbing to reduce exposure of other sources of lead in households or the environment
Dunedin City Council has yet to carry out its own review.
