NI Water had pledged to complete a £4.5 million scheme by Summer 2016, but have since confirmed the third and final phrase has encountered significant technical difficulties and is unlikely to be completed on time.
Councillor Andrew Muir said: “The latest update from NI Water is encouraging, but it is disappointing for all involved that the work will fall short at the final hurdle.
“After relentless lobbying since 2010, I was delighted to see construction work finally get underway and with a completion date already established. This gave great hope to many people across Holywood who have had to endure awful odours over the years as a result of the pollution problems at Kinnegar Lagoons.
“While it is great to hear work has been completed to address two out of the three overflows considered to be at the source of the problem, the third phase includes tunnelling under the A2 Bangor to Belfast Road and NI Water must overcome any difficulties, allowing them to complete the overall project.
“This work won’t only address the odour problems for residents, but will significantly boost the local environment, improving it for future generations.
“That’s why, unlike others, we can’t claim victory just yet and I’ll be ensuring pressure remains on NI Water to deliver what was promised.”