Scores of residents are complaining because water in Paphos and Geroskipou has an earthy taste and smell, daily Politis reported on Friday.
The water in question comes from the Asprokremmos water treatment plant.
According the paper, the low level of water in the Asprokremmos reservoir combined with high temperatures have led to the growth of algae, as shallow waters and heat tend to encourage the growth of the organisms.
Asprokremmos is one of the main water supplies to Paphos and the surrounding region.
The authorities, who were not available for comment on Friday, told Politis that despite being unpleasant, the water was not dangerous.
Tests have been carried out and there was no danger to the health of residents who consume the water, as all results are within allowed levels, they said.
Authorities, however, are trying to solve the problem by chlorination and fine-tuning the refining methods which are being used. In addition, they are increasing the amount of water from the Kannaviou reservoir to affected areas.
Paphos residents, especially farmers, have long been complaining because Paphos is the only area in Cyprus which has no desalination plant and relies solely on dams for its water supply, both for residential and farming use.
A mobile desalination unit had been installed in 2010 but was dismantled in 2016 after it was deemed not cost-effective.
The new plant to be built in Kouklia was approved by the council of ministers last year. It will be in the same location where the mobile plant was and is going to have a daily capacity of 15,000 cubic metres.
The unit is expected to be fully operational by the summer of 2020.