A red-alert warning put in place on October 28, and downgraded to amber in November, was lifted on Wednesday.

Weekly monitoring conducted by WaterNSW has shown that concentrations of blue-green algae have declined.

With summer officially under way, the announcement comes at the ideal time for Lake Keepit Holiday Park who are chock-a-block with bookings.

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"The algae-alert really didn't affect us as much as I thought it was going to," park manager Leith Smith said.

"A lot of local people were still out here using the dam, because there wasn't actual blooms of the algae, it was just the count in the water

"So we let people know that the dam was under the algae alert and then it was up to them what they wanted to do."

Mr Smith said the focus now will be on whether the algae stays away for the remainder of the season.

"We're going strong with bookings heading into summer, most of the weekend cabins are booked, and then as soon as school holidays hit over Christmas and New Year's it's very busy," he said.

"It's fantastic and a good problem to have."

As of Tuesday, WaterNSW had the levels at Keepit Dam sitting at 26.4 per cent.

A red-alert remains in place for Copeton Dam, with Split Rock Dam and Chaffey Dam sitting on a green-alert.

A red-alert indicates that the species of blue-green algae identified are potentially toxic and may cause gastroenteritis in humans if consumed and skin and eye irritations after contact.

Blue-green algae occur naturally and can reproduce quickly in favourable conditions where there is still or slow-flowing water, abundant sunlight and sufficient levels of nutrients.

Boiling the water does not remove algal toxins.