More than $4 million will be spent to make Lake Hayes swimmable again.
The Department of Conservation has announced a raft of new projects in the South Island funded through the Jobs for Nature programme.
One of them is the rehabilitation of Te Wai Whakaata, the Lake Hayes catchment.
Over the past 70 years, the 280ha lake near Queenstown has suffered from a build-up of nutrients from human activity.
This includes historical fertiliser application, septic tank effluent and the removal of wetlands and riparian plantings. The catchment has been used for agriculture since the late 1800s.
This has lead to periodic algal blooms caused by a build-up of phosphorous, which often leaves the lake unsuitable for swimming.
The project is being run by Mana Tāhuna, a charitable trust based in Queenstown, and DoC has provided $4.45m for the work.
Over three years, the project will work with other community groups to plant natives and restore wetlands as well as control possums, rats and stoats and install sediment traps.
It is estimated that up to 25 people will be employed through the project.
Algal blooms have worsened since 2006, turning parts of the picturesque lake a reddy-copper colour.
The declining water quality is not just visual - it has led to fish kills and skin irritation for swimmers.