Fears an Otago town's water supply could be affected, if a bypass isn't formed in the Phoenix Dam

The Clutha District Council has submitted a consent application to the Otago Regional Council, to divert the stream above the dam and form a bypass.

It would ensure the supply of water can continue for Lawrence as the dam is drained.

The township already has a boil water notice in place.

Clutha deputy chief executive Julie Witt says work on the bypass needs to commence immediately - as the bottom 25 percent of water will be unusable.

She says they have around four to six weeks of capacity remaining - which is subject to rainfall.