Bowsers are still supplying 2,500 homes in Exeter
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South West Water has admitted that diesel was accidentally put in supplies for parts of Exeter two days before residents were alerted.
Ten litres of diesel got into the water following confusion with a barrel of chlorine at a pump at Marypole Reservoir on Friday afternoon.
South West Water (SWW) says it only became aware of the incident after complaints at 1900 GMT on Sunday.
But it said continuous monitoring was "not practical".
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We cannot have continuous monitoring across the distribution system
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Managing director Bob Baty, said: "By 2100 GMT on Sunday we had identified what the cause was.
"We responded immediately to alert customers with leaflets early on Monday."
He said water was monitored every week.
"We cannot have continuous monitoring across the distribution system.
"It is not practical to do, but as soon as we had notification we sprang into action.
"I personally was in at 0600 GMT to make sure everything was being done."
Reservoir drained
SWW had started an inquiry to prevent a repeat of the incident which it blamed on "human error".
People in about 2,500 houses in the affected area of Stoke Hill, Beacon Heath and Pennsylvania are still being advised not to drink tap water and are getting supplies from bowsers.
About 1m gallons of water, the equivalent of two Olympic size swimming pools, is being drained from the reservoir into a stream.
SWW says it is working with the Environment Agency to ensure that it does not affect the overall water quality.
Kim Vanstone, the contracts manager responsible for flushing the reservoir, said: "The small flow into the surface water system is being very carefully monitored.
"It's mainly very clean water which has been dechlorinated before going into the environment."