TAMWORTH Regional Council has been able to plug one leak in the city reservoir which was pouring out 60,000 litres a week.
The council spent $15,000 to patch over one leak on the outside of the 10m high tank, however there is still believed to be a leak on the reservoir's floor.
The council's water and waste manager, Dan Coe, said a specialist contractor had successfully fixed one leak in the One Tree Hill reservoir this week.
"The contractors injected a polyurethane grout at high pressure on a 20 metre section of the external floor and wall joint of the reservoir," he said.
"The grout is designed to set in contact with water and stop any leaks."
Mr Coe said because the grout was used on the outside of the reservoir there is no impact on the quality of the water.
It was revealed the tank had been draining about 6000 litres of treated water about a fortnight ago.
"This is good progress to have the leak from the floor wall joint stopped, however we still have a leak most likely coming from the reservoir floor," he said.
"We are now discussing options with diving companies to have another inspection done inside the reservoir."
Work will also start soon to fix the roof of the smaller reservoir on the site.
Residents were advised they would see water tankers taking the remaining six megalitres of water from the reservoir for use in road construction and watering parks and reserves.
The reservoir needs to be empty before work can start on the roof.
The tank is still holding about two megalitres of water.