The government will hold its own independent inquiry into the contamination of Havelock North's water supply, it has announced.
About 3200 residents in the Hawke's Bay town have been hit by gastric illness, with the outbreak linked to campylobacter in the town's water supply.
More than a dozen people were still in hospital and one person was still in intensive care.
It was revealed today that all of nearby Hastings' water supply was also being chlorinated after an E coli indicator was found in an emergency water tanker taken to Havelock North.
The water for the tanker came from a supply in Hastings thought to be safe.
Announcing the inquiry today, Health Minister Jonathon Coleman said it was important the public had confidence in their water supply.
He said the inquiry would look at the outbreak and the response, as well as considering any wider systemic issues.
Dr Coleman said Cabinet would consider the terms of reference for the inquiry on Monday.
Associate Health Minister Sam Lotu-Iiga said the public needed to have confidence in its water supply.
"We've got to determine what went wrong, who did what and when. And it's about accountability to the people of New zealand. People are going to want answers around what happened, and that's why a government-initiated inquiry is important, because it's independent."
Further tests for suspect water tanker
Earlier, tests on the tanker with drinking water that had been sent to Havelock North High School, which had just re-opened after being closed for two days, revealed E coli might be present.
Hastings District Mayor Lawrence Yule told a news conference the result could not be confirmed until further tests were completed tomorrow.
As a precautionary measure, Mr Yule ordered the chlorination of Hastings' water and advised people to boil water before they drank it.
He said the test could indicate several things, including a possible false positive, contamination in the tanker or contamination in the water supply to the tanker.
"The water has been taken from a secure supply - we have not found one skerrick of evidence that that supply has any contamination in it."
He said the Ministry of Health was supporting the council's approach.
Hastings District Council water engineer Brett Chapman said the tanker was still at the high school when students were arriving this morning, but had since been removed.
Mr Yule said there was no physical connection between the water supplies of Hastings and Havelock North and they fed off completely different systems.
The affected areas in Hastings also covered Flaxmere and Bridge Pa.
Anyone who took water from the tanker and still had it in containers was being asked to dump it.
The water from the other eight tankers in Havelock North had been tested and was clear, however the water in all the tankers was now being chlorinated.
'An absolute disaster for our community'
Havelock North High School principal Greg Fenton told Nine to Noon the current situation was a "circus".
Mr Fenton said while no students were thought to have drunk from the tanker, people from the community had collected water from that source.
"I'm a bit concerned for the community users of the tanker who have been coming in on a regular basis and filling up their bottles."
Mr Fenton said of the 900 students at his school, 416 were off sick with the gastric illness.
A local supermarket and business had been supplying students with bottled water, he said.
'There's extreme frustration' - Greg Fenton
The Hastings District Council told him the tanker was tested before it was put into use, he said.
"The council's word to me was that it had been tested before delivery to the site and it was clear.
"This is an absolute disaster for our community, business are losing lots of money, lots of our staff have been sick as well, so there's extreme frustration.
"From an education perspective many of the first symptoms started appearing [in students] on Thursday. We got no notification until Friday evening that it was the water that was causing the problems."
Mr Fenton said a lot of sick students had lost five days of school and, for a senior student who was heading rapidly towards the conclusion of their school year, it would affect their education.
"Issues like completing the syllabus have arisen and that just adds to the frustration.
"It's inexusable that the council did not tell the school earlier about the contamination and it should have taken precautionary approach and chlorinated the water supply."
Council considers closing Havelock North's bores
Mr Yule today released a report the council commissioned in March about how E coli ended up in a bore in Havelock North last year.
That bore is now shut and the bore believed to be contaminated this time has not been affected in the past.
The report was carried out by consultants Tonkin and Taylor and Mr Yule said it was inconclusive but it was possible the contamination came from a nearby property.
The Hastings District Council has said it will also hold an independent inquiry into how the latest contamination happened.
Its drinking water assessor, Peter Wood, said this afternoon the council was also considering closing the town's two remaining bores.
"For Havelock North the supply is now chlorinated," he said.
"The council is considering whether to close the current bores that have been in use and go back to connecting up to the Hastings system, so that would certainly reinforce the need to chlorinate the Hastings system so it can get through into the Havelock North systems."
Hawke's Bay DHB chief executive Kevin Snee said this afternoon that Auckland DHB's Medical Officer of Health David Sinclair arrived yesterday to assist.
"What people will see for however long this continues is that there will be a range of people coming in from other district health boards to provide support.
"You can imagine, the longer this goes on for the more people get tired. so you need to bring people in to help."