The government is considering changes to the laws around fluoridation.
Associate Health Minister Peter Dunne said fluoridation is the most effective way to limit tooth decay, particularly in young people.
Whakatane district council is the latest local body to adopt a no-fluoridation policy, with councillors voting six to five to scrap fluoride, despite majority support for adding it to the water from residents in three referendums during the past 20 years.
Anti-fluoridation lobby figures show only 23 of 67 councils still fluoridate their water.
Mr Dunne said he was disappointed more councils didn't fluoridate, and he had significant concerns about the way things were working at the moment.
He regularly meets with dental representatives and has spoken to Local Government New Zealand about the issue.
"The current system doesn't deliver the sort of level of spread that would be desirable. The issue then is what are the alternatives, should there be a change to the current situation - these are all matters the government is currently considering."
Local Government New Zealand president Lawrence Yule said his group wanted decisions about fluoride in public water to be made by central government.
Decisions about fluoride should not be up to local government and local bodies were involved only because they own the water supply.
They were not experts at making health decisions, he said.
Health professionals have also criticised Whakatane Council's decision, saying the council ignored scientific evidence in favour of fluoridation.
The Ministry of Health said it was disappointed with the council's decision.
The Ministry's chief medical officer Don Mackie said the ministry supported water fluoridation as a safe, effective and affordable way to prevent and reduce tooth decay.
He said Whakatane's decision flew in the face of both scientific research and public opinion supporting water fluoridation.
But the Whakatane district mayor is standing by the council's decision.
Tony Bonne said the government wouldn't take responsibility on the fluoridation of water because it didn't want to accept any of the blame if things went wrong.
Mr Bonne said an MP once told him the government wouldn't make the decision over fluoride because if things went wrong then it was not their responsibility.