Residents of the Far North township of Rawene are being warned to reduce water consumption or face more severe water restrictions.
The district council says if demand doesn't drop immediately, it may have to reduce water pressure to Rawene or, in the worst case scenario, supply water only for sanitary purposes.
Rawene already has restrictions in place on the use of hoses and sprinklers and in February it urged residents to voluntarily reduce water use but council spokesperson David Penny says people have failed to respond.
Mr Penny says the situation is severe, with water flows into the Petaka Stream, which feeds the town's water supply, now at critically low levels as drought conditions continue. Much of Northland's west coast has had no rain since Christmas.
He says anyone breaching the current restrictions will face steep fines.
The council says Kaitaia people also need to use less water although the situation there is not as critical as Rawene's.