Business and schools have been forced to close and as many as 40,000 homes could be without water after a pipe burst at a treatment plant.
The incident at Bryn Cowlyd Water Treatment Works in Dolgarrog, Conwy, has closed five schools and affected businesses and services, including a GP surgery that has cancelled face-to-face appointments.
Welsh Water said about 8,000 homes lost supplies on Wednesday night and another 33,000 were at risk of losing theirs until repairs were complete.
The firm said the issue was affecting Conwy county only, after previously saying properties in Denbighshire had also lost water.
Hospital sites in Llandudno, Colwyn Bay and Bryn-y Neuadd have experienced water supply issues but no disruption has been caused, Besti Cadwaladr health board confirmed.
Llanrwst and Conwy library shut on Thursday, as well as Bodlondeb offices in Conwy.
But some small businesses said they would remain open despite the lack of water.
Worthy Hairdressing salon in Conwy has chosen to open its doors under a "dry cuts only" policy as it was the only service they could provide.
Hairdresser Jade Barrett said they were booked up all day on Thursday but that had "changed a lot" as they continued to rearrange appointments.
Cafe owner Isaac Simeon said he was unable to make hot drinks but had plenty of cakes and sandwiches to continue business as normal.
"I can't make coffee and tea today, but it's OK, I am open. If not, and there's no people coming, no problem," he said.
Tourist attractions Conwy Castle and the National Trust's Bodnant Gardens will remain closed on Thursday while Bodreinallt surgery in Conwy has cancelled face-to-face appointments.
Conwy-based breakfast restaurant M&J bistro announced its closure on a Facebook post, adding it would keep customers updated as to whether it can reopen on Friday.
Duty manager of Caer Rhun Hall Hotel, Torin Chaplain, said the water outage had caused some issues as their outbuildings remain without water, as well as part of the main hotel.
"All our public bathrooms have stopped working," he said, adding that "for some reason though, we seem to be very lucky because the kitchen seems OK".
"We just hope it gets fixed by the end of the day" he added.
Welsh Water said tankers were being mobilised to keep as many people on supply as possible.
The company added its crews were working on repairs, but the work was "difficult and dangerous" because the burst water main was two-and-a-half metres underneath the river bed.
Crews would have to create a dam-like structure in the river to be able to excavate and access the damaged water main, the company added.
The incident is affecting supplies in Conwy, Dolgarrog, Eglwys Bach, Groesffordd, Gwytherin, Henryd, Llanbedr y Cennin, Llanddoged, Llanfair Talhaiarn, Llangernyw, Maenan, parts of Llanrwst, Pandy Tudur, Pentrefelin, Rowen, Rhyd y foel, Tal y Bont, Tal y Cafn, Tyn Groes and Trofarth.
Councillor Goronwy Edwards, who is responsible for infrastructure and facilities in Conwy, told BBC Radio Wales Breakfast he was waiting for more information but work was under way to set up distribution centres for the vulnerable in Eirias Park, Colwyn Bay.
Welsh Water said customers had been contacted directly by text message to inform them about the issues and bottled water was being delivered to vulnerable customers.
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