Water from the River Dochart has begun to clear up, but is not yet drinkable, Scottish Water have said.
The river became contaminated last Thursday following a "botched" fuel robbery at the Gulf Lix Toll near Killin saw diesel leak into the waterway.
All water in the village was shut off as a precaution, while SEPA investigated and began to clean up the site.
As of 9.15pm on Sunday February 22, residents have been advised that using the water for showering, bathing and washing clothes and dishes is now safe.
Boiling the water will not make it safe to drink.
A Scottish Water Statement read: "Following several days of continuous flushing of the water network in Killin and extensive sampling and testing, we are pleased to share that water quality has improved.
There were fears over the weekend that the contamination could leak into Loch Tay and the River Tay, but Scottish Water’s fast work managed to contain the oil slick to the eastern side of the loch.
Over 500 properties have been affected, with about 40,000 bottles of water handed out by volunteers since the spillage.
Evelyn Tweed, MSP for Stirling said she was "deeply concerned" by the contamination.
She continued: "The impact of the spill into the River Dochart has been distressing for the community, and I will continue to support them as the recovery continues. Despite the difficulties the community has faced this weekend, they have shown incredible resilience, patience and understanding during this difficult period and I want to thank them for this.
"I also want to thank all the local businesses, both in Killin and further afield, who have kindly provided water, showers, transport and laundry services.
“Scottish Water’s response has been noted as being excellent with swift, round-the-clock information and resources provided. Over 100 workers have been on site over the weekend and I know that the Killin community have found their communication and support reassuring. Investigations into this incident continue and I will continue to work with all agencies involved to share information with the community."
Scottish Water are continuing to work "round the clock" to flush the water system and clean the river. 100 staff still remain at work.
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