Council utilities manager Dave Watson said he appreciated residents' concerns when the crisis developed at the busiest time of the day for householders on Monday.
"We had been struggling to replenish the number two reservoir over the weekend, after we lost flow and water into town, and we haven't been able to pipe enough water quickly enough to meet demand from our impound supply on Laws Rd, so we ran out of water again mid-afternoon on Monday, just as we had on Friday last week," he said.
"We've had a problem with a Clayton valve which malfunctioned. This has never happened before and at the moment we're trying to recoup the situation. The problem is that once the pressure goes on, such as on Monday afternoon, the flow couldn't keep up."
Mr Watson said the system was being monitored and staff continued to investigate the failure.
"The initial problem followed urgent repair work on the water mains feeding Dannevirke. The total hosing ban now in place for Dannevirke will certainly help improve the water pressure and our attempts to replenish the number two reservoir."
Mr Wimsett reassured residents there was no problem with water storage at the impound supply.
"There is a serious amount of water up there. The dam is 10.6 metres deep and almost at maximum and even with the reduced water takes imposed by Horizons Regional Council we have up to 80 days' supply," he said.
"The trouble is we were expecting the situation to recover over the weekend, but it got worse.
"Dave [Watson] will now plan to either automate the Clayton valve or remove it and council already has plans in place for ultra-violet treatment of water which will give us other options.
"In the short term this has been a very serious problem, but in the long term we will resolve it."
The crisis wasn't causing the Dannevirke Volunteer Fire Brigade many concerns, fire chief Peter Sinclair said.
"We have our tanker attached to all our urban turnouts just for security in case supply fails," Mr Sinclair said. "The 12,000 litres of water in that is plenty to put out a house fire."
However, people needed to be extra vigilant, after a vegetation fire on the corner of State Highway 2 and the Matamau/Ormondville Rd on Monday night, he said.
"It appeared a truck carrying a large piece of equipment took out the power lines, which dropped into the grass.
"The truck driver and local farmers beat out the fire with sacks ... But this just goes to show how dry it is out there at the moment," Mr Sinclair said.
The power was out to Norsewood residents for a short time as a result of the fire.
Despite a small shower early yesterday, Dannevirke has had no decent rainfall since before Christmas.
Searing temperatures up to 29C had farmers east of Dannevirke worried, former farmer Frank Kay said.
"It's dry, but as long as we get the autumn rains we'll get through," he said.
"But the thistles are loving this dry weather and when cracks in the paddocks open up, they're away.
"The only good side is that the dry forces the stock to clean up some of the rubbish in the paddocks."
Niwa said the district was one of its hotspots, with the soil much drier than normal for weeks.
Norsewood has had two nights with 5mm of rain, but January is shaping as one of the driest in years, weather-watcher Lyn McConchie said.
