The burst has taken place on a four-inch water main on the junction between the B1225 Caistor High Street and the A631 Ludford Road.
Some escaped water has affected the A631, and motorists are being asked to drive with care.
Temporary traffic lights are in place while Anglian Water carry out the repairs.
A statement from Anglian Water has apologised for the disruption, and said that all affected residents should have their water back to normal by 4pm today.
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