Bottled water has been delivered to homes and a school is shut.
People have been asked not to drink their tap water or wash or bathe with it.
Independent Water Networks (IWN) announced there was an incident on Thursday 18 January 2024.
It is affecting about 320 homes on the Marleigh Development in Fen Ditton on the edge of Cambridge.
IWN’s emergency contractor, Water Direct, will continue to deliver further bottled water.
The local Marleigh Primary school was shut on Friday 19 January 2024 as a precaution.
IWN has thanked residents for their patience.
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