The City of Iqaluit says testing shows a high concentration of fuel in a tank that supplies water to the Nunavut capital.
It says the fuel could be diesel or kerosene, but that long-term health effects are not a concern.
Residents of the community of 8,000 people were told on Tuesday not to drink tap water after it was discovered it may be contaminated by fuel.
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Some residents reported smelling fuel in their water last week, but city officials said regular testing came back clear.
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Staff then discovered a holding tank that had a strong fuel smell and the city put out a notice to not drink the tap water.
The Nunavut government has been flying in shipments of potable water, while many residents have collected freshwater from a nearby river.
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