The detection of animal and human waste in public drinking water supplies has halved over the last two years.
But tests have revealed that, despite improvements, contamination levels of E.coli are still five times higher than found in comparable supplies in England and Wales.
An Environmental Protection Agency (EPA) drinking water quality report reveals that boil water notices or restrictions were issued for 53 supplies serving about 93,000 people throughout 2009.
And remedial works have been ordered on 264 public water supplies which were found to be still potentially risky to human health by the end of 2010.
Gerard O'Leary, of EPA's Office of Environmental Enforcement, said more investment was needed to get levels of E.coli, which comes from human and animal waste, down to those of other EU countries.
"The standard for E.coli in drinking water is zero," he said. "It can come from a number of sources, a septic tank, a sewage treatment system, from animals as they drink from rivers and streams or from inadequate disinfection."
A total of 250,000 samples were tested in 2009 with E.coli detected at least once in 27 out of 944 council-run public water supplies, down from 39 in 2008. Elsewhere, a sixth of private group water schemes, which are usually run by groups of homeowners, were contaminated at least once.
Nine local authorities which failed to improve supplies were hit with 28 legally binding directions from the EPA in 2009.
Kerry County Council was the worst offender, with 13 directions and 53 separate remedial works ordered.
A prosecution was also taken against Galway County Council for not carrying out works within a certain timeframe.