"Toxin-producing blue-green algae is consistently present in the drinking water," The Herald said, quoting a report by the Harare municipality's works department.
"Free residual chlorine is consistently low in the drinking water and viable counts of bacteria and coniforms continue to be present in the drinking water."
City authorities blame the deteriorating water quality on poor treatment by the Zimbabwe Water Authority appointed by government to manage water in major towns and cities.
The report which followed tests done by the municipality and independent microbiological analysts, said water quality fell short of World Health Organisation (WHO) and the Standards Association of Zimbabwe (SAZ) safety standards.
Acting director of works Michael Jaravaza told The Herald several food manufacturers have complained about the poor water quality and said they could stop production if the quality does not improve.
The latest findings contradict claims by health minister David Parirenyatwa two months ago that Harare's water was safe for drinking.
Harare has been experiencing water problems which worsened in recent months leading to outbreaks of dysentery in high-population suburbs.
Residents from some areas resorted to drawing water from unprotected wells after going for weeks without water supplies.