Hotels, resorts and other businesses in this burgeoning rainforest tourist town on Vancouver Island have been told to shut down because of a water shortage.

Because of high demand and very little rain since July, the town's main reservoir is so depleted there might not be enough water to fight a fire, Mayor John Fraser said Tuesday.

"That's why the panic's on," he said.

A notice issued Tuesday said residential water service was being given priority in the town of 1,500 year-round residents.

"The WATER SHORTAGE has become extremely severe," the notice read. "All lodging, food service businesses are asked to shut down PRIOR TO FRIDAY, SEPTEMBER 1ST, 2006 until further notice. Other commercial water users must not consume any water whatsoever."

Going into the Labor Day weekend, one of the area's busiest of the year, "we're communicating with resorts, asking them to contact guests and advise them they possibly don't want to come out there right now," said Leif Pedersen, administrator for the District of Tofino.

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The town is getting water from a secondary source, Ginnard Creek, and residents have been told to boil it as a precaution. Officials also are working to have firetrucks haul water to the reservoir from as far as Ucluelet, about a 30-minute drive to the south, Pedersen said.

"It will be going on constantly," he said.

Tofino gets more than 10 feet of rain a year, but Pedersen said the reservoir is so low that "we don't know" how much water is left.

In December, the provincial Community Services Ministry decided that Tofino, which experienced a less severe water crisis in 2004, was eligible for grants to upgrade its water system. A federal, provincial and municipal water system improvement project, estimated to cost nearly $5.5 million, is scheduled for completion next year.