Llyn Padarn, near Llanberis, has had problems in the past with poisonous algae, closing the water to users.
The EAW says despite some improvements, more needs to be done around storm overflows which, while protecting homes, can lead to sewage in the lake.
Dwr Cymru Welsh Water says it wants to upgrade treatment works nearby.
Continue reading the main storyLlyn Padarn is not only important to the local environment - it also helps sustain jobs for local people”End Quote Alun Ffred Jones Assembly Member for Arfon The EAW says that improvements have been made to sewage works in Llanberis since the problems in 2009.
But its latest report says that there is still a problem with storm overflows which are discharging untreated sewage into the lake and the streams which feed it.
And there have been concerns raised there could be another algae outbreak this summer.
A Dwr Cymru Welsh Water statement said: "We are investigating the options that may be possible to implement to help resolve this problem for the long term.
"These include upgrading the treatment processes at the local wastewater treatment works, and also the possibility of treating wastewater elsewhere and not discharging into the lake at all."
The report recommends that Dwr Cymru Welsh Water reduces the discharges and develops a long term strategy to improve the local sewerage system.
'Remain vigilant'The Llyn Padarn Forum met on Friday evening to consider the report.
It is made up of officials from Dwr Cymru Welsh Water, Environment Agency Wales, Countryside Council for Wales and Gwynedd County Council.
Group chair, Alun Ffred Jones, Assembly Member for Arfon, said: "Llyn Padarn is not only important to the local environment - it also helps sustain jobs for local people.
Continue reading the main story...this year's weather pattern is very similar to 2009 so we remain vigilant in case the algal blooms reappear”End Quote David Edwel Environment Agency Wales "That's why we must work together to make sure the water in the lake continues to improve."
The group heard that improvements to Llanberis sewage works in October 2009 mean that fewer nutrients - one of the main causes of algal blooms - are getting into the lake from treated sewage effluent.
EAW area manager David Edwell warned that another algal bloom this summer could not be ruled out.
"Nobody wants to see a repeat situation," he said, "but the science behind these blooms is extremely complex and this year's weather pattern is very similar to 2009 so we remain vigilant in case the algal blooms reappear."
Gwynedd Council is working towards making the lake an official inland bathing water if the quality of the water can be improved.
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