For three weeks about 700,000 people in Lancashire had to boil their water before drinking it after a parasite was found at the Franklaw facility in 2015.
The microbial parasite, which can cause diarrhoea and abdominal cramps, forced supermarkets to put a restriction on the amount of bottled water bought per customer to manage the surge in demand.
The Drinking Water Inspectorate (DWI) is prosecuting United Utilities over the incident between 20 July and 18 August 2015. Richard Banwell, counsel for the DWI, said the company is likely to face a “substantial fine”.
Lisa Roberts QC entered the guilty plea on behalf of United Utilities to charges of supplying water unfit for human consumption.
District Judge Jane Goodwin agreed to formally withdraw charges of failing to properly disinfect supplies and of not ensuring an adequate treatment process.
A United Utilities spokesman said: "We have taken a full and open role with the DWI during its investigation and complied with all its requests for information.
"A full programme of remedial and repair work has already been implemented to safeguard future supplies."
United Utilities will attend a sentence hearing on 21 August at Preston Crown Court.