Lowering the water level started on Monday and was expected to take seven to 10 days. The extracted water is being fed into Kauri Creek via a manifold to avoid scouring out the creek bed.
Mr Carter said council contractors and staff had been monitoring the leak for some time and keeping the dam safety engineer updated.
"He says there is very little to almost no chance of a sudden failure of the dam ... We're just being cautious," Mr Carter said.
The dam is owned by the Far North District Council and was built in 1964 as a backup water supply. It is about 20m high, 125 long at the crest, and 40m-50m thick at the base. It is accessed from Okahu Rd.
The water in the dam is rarely used because of toxic algal blooms which occur in summer. It could not be used, for example, during the last major drought of 2009-10 when the Awanui River, the source of Kaitaia's town water supply, almost ran dry.