Wellington City Council is set to consider how it would fund the fix of 1000 leaks in the capital this financial year.
Wellington Water has briefed the city's councillors to indicate it has the extra capacity to fix the infrastructure.
However, to do the work the water provider would need an extra $2 million to $2.5m added to its annual budget.
Wellington Mayor Tory Whanau said the council needed to consider how the work would be funded.
"Do we take from certain areas where there's been underspend for the last few months? Do we debt fund it? We're not keen on making cuts to things that have already been decided and look like they will be spent, and we certainly don't want to increase rates."
She said it would be a tricky task for the council's finance team but that if the council did not consider it, councillors would all be failing on their campaign promises.
She told RNZ Wellington Water did not know yet where the exact leaks were.
"If we can find the $2 million to $2.5 million and provide that to Wellington Water that will be on the provision that they provide exact reporting as to where these leaks are, even at a suburb level and the type of pipes we are working on."
Council officers will now work on putting together a paper with options for councillors that will be considered either as part of the Long-term Plan, at a finance and performance committee meeting on 7 December or the council meeting a week later.
It follows recent reporting that Wellington Water is working with emergency agencies to deal with potentially critically low water levels this summer.
The capital is currently under level 1 water restrictions, meaning households can only use sprinklers every second day.
But, due to warmer weather and leaky pipe infrastructure, the water provider is preparing for level 3 restrictions - that would see all outdoor residential use for water banned.