More than 3,300 persons in the town of Havelock North fell sick with gastroenteritis brought on by campylobacter contamination of the drinking water, Xinhua news agency reported.
At least 17 persons were hospitalised and one person is still in intensive care, according to the local health authority.
The government had initiated an independent inquiry into the water contamination, the cause of which is still unknown, Health Minister Jonathan Coleman said.
"The inquiry will look at the events surrounding the outbreak and the response, as well as consider any wider systemic issues," Coleman said in a statement.
The situation was compounded on Thursday when one of the nine water tankers taking drinking water to Havelock North residents was found to be contaminated with e-coli.
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