The Director of Public Health has lifted precautionary advice to not drink water from the West Coast Hospital, after a test last week revealed elevated levels of heavy metals.
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In a statement, Public Health said further testing of the hospital and town water supply showed the water was safe to consume.
Following this test result, the Department of Health worked with TasWater to further investigate the water quality, taking samples from the hospital water supply and from the wider Queenstown area.
Public Health boss Dr Mark Veitch said further testing revealed the earlier sample was not representative of the water supply to the Queenstown area.
"I would like to remind Tasmanians of the standing advice that when a household tap has not been used overnight, you should flush the tap for at least 10 seconds before drawing water for drinking or cooking," Dr Veitch said.
TasWater is responsible for the supply and management of public water supplies throughout Tasmania.