|Routine tests last year found the parasite cryptosporidium|
Water firm United Utilities has pleaded guilty to supplying water that was unfit for human consumption.
About 700,000 people in Lancashire had to boil their water before drinking it for almost three weeks in the summer of 2015 when a parasite was found at the Franklaw water treatment works in Preston.
The microbial parasite cryptosporidium left customers without safe drinking water causing supermarkets to put a restriction on the amount of bottled water bought per customer after a surge of panic buyers.
The water firm is being prosecuted by the Drinking Water Inspectorate after routine tests last year found cryptosporidium, which can cause diarrhoea, stomach cramps and vomiting.
Lisa Roberts QC entered the guilty plea on behalf of United Utilities to the charge of supplying water unfit for human consumption between 30 July 2015 and 18 August 2015.
|About 700,000 people had to boil their drinking water|
District Judge Jane Goodwin agreed to formally withdraw charges of failing to disinfect water that was supplied for domestic purposes and failing to design and continuously operate an adequate treatment process before supplying water for domestic purposes.
Richard Banwell, counsel for the Drinking Water Inspectorate, asked for the case to be sent to Crown court saying it was likely there would be "a substantial fine in this case".
A United Utilities spokesman said: "We have taken a full and open role with the DWI during its investigation and complied with all its requests for information.
"A full programme of remedial and repair work has already been implemented to safeguard future supplies."
Sentencing will take place on 21 August at Preston Crown Court.