An independent Tonkin and Taylor report found there is very low risk to the Frimley bore field from Lowe's Lake.
A budget of $2m has been proposed for the district council to carry out the work.
Other ideas include a focus of "on property controls" in the industrial catchment which currently has stormwater flow into the lake.
These include adding stormwater treatment devices at the end of pipes to contain and remove contaminants such as spills, road runoff and overland flows which may enter the water.
Tightening of rules regarding industrial activity is also part of this.
Hastings councillor Damon Harvey said he was pleased that the lake is to be filled because it was one of his key objectives in his recent mayoral campaign.
"I'm pleased that I raised the issue on behalf of the community and that we now have a way forward that protects our valuable drinking water sources."
He said plans were still being put in place but he looked forward to further detail on how the lake will be decommissioned as well as future treatment options in the area for stormwater.