The minister for Municipal Affairs says his department is closely watching the situation in Daniel's Harbour to ensure residents are not dealing with a dangerous scenario.
Steve Kent said making sure the threat to infrastructure is minimized is key.
Daniel's Harbour was hit with a landslide on Tuesday, which took out a full-length fence meant to keep people away from the area and leaving a hole about 15 metres deep and up to 75 metres wide.
The town has witnessed numerous landslides in the past, some taking entire homes with them.
"Making sure that all of our residents have access to clean and safe drinking water is obviously a high priority for us," he said.
The landslide has come close to impacting the community's main source of clean drinking water.
"In the case of this water line, if it is impacted by further landslide activity then we do have a contingency plan to run a temporary line, and that's already been assessed by officials at municipal intergovernmental affairs and fire and emergency services," Kent said.
"So in the event that the water line is impacted by further activity in Daniel's Harbour, we're quite ready to respond."
Kent said officials from transportation and works, municipal and intergovernmental affairs, as well as fire and emergency services will all be in Daniel's Harbour on Tuesday to further assess the situation.