To determine factors associated with microbiological safety of public drinking water systems in regional New South Wales (NSW), Australia. We analysed 107,000 end-user drinking water samples for an association between detection of Escherichia coli and drinking water system features, sample year and season using NSW Health Drinking Water Monitoring Program data, 2001-2007. We used negative binomial generalized estimating equations with adjustment for autocorrelation and clustering. We detected E. coli in over 2% of samples from 40% (129/323) of systems. E. coli detection was significantly more common in earlier years and during summer (p<0.001). On multivariate analysis E. coli detection was significantly associated with smaller systems; watercourse sources; no disinfection or disinfection with ultraviolet only; and higher post-treatment mean turbidity (all p< or =0.01). Detection was most strongly associated with lack of disinfection (incidence rate ratio 12.6, p<0.001) and smaller supply systems (1% reduction in E. coli detection for each 1,000 person increase in supply population, p=0.004). Ultraviolet disinfection alone was the least effective disinfection method (p<0.001). Even in developed countries, drinking water systems without disinfection or serving small populations appear vulnerable to the effects of faecal contamination, which presents a risk of waterborne disease outbreaks.