The New South Wales Health Department has issued a warning to residents in Braidwood east of Canberra to boil their water.

High levels of E coli bacteria were found in the water supply today after a fault in the council's water treatment process.

The department is urging residents to boil any water for at least three minutes before consumption.

Palerang Mayor Jim MacLachlan says the council is currently carrying out maintenance on the chlorination plant.

"We had a problem with the chlorination of the water supply in Braidwood," he said.

"For some reason the pH is very high and therefore the dosing of chlorine is more difficult but there has been a minor malfunction within in the chlorination plant and that's being worked on by staff."

After almost 40 years of providing fluoride to the shire's residents northern NSW's Ballina council is recommending that it scrap the service.

Since 1965 the council has offered fluoride in one form or another.

But new legislation now classifies fluoride as a poison.

Ballina's manager of water and sewerage, Phil Warner, says it is time stop the practice because the council is no longer authorised to hand out fluoride.

"The council has been providing fluoride to the community over the counter for many years now, but in tablet form and also in drop form," Mr Warner said.

"Basically fluoride is now considered a poisonous substance."

Residents in the small town of Forsayth, south of Georgetown, say their water supply is so bad it is making people sick.

Locals says the water has always been undrinkable but a $500,000 treatment plant installed last year was supposed to fix the problem.

A FIVE-year-old boy has been hospitalised for cryptosporidiosis after claims the water he drank from a garden tap was contaminated.