Residents have been warned not to drink from their taps and to avoid preparing food with their water after routine water quality tests revealed cryptosporidium.
The parasite can infect bowels and cause gastroenteritis, which in turn leads to vomiting and diarrhoea.
The boil water notice was issued by Bristol Water shortly before 5.45pm on Thursday, and applies to residents in the BS21 and BS49 postcode areas of Clevedon, Bristol.
As a result, Clevedon School and Mary Elton Primary School closed their gates on Friday.
They later posted the update: "School Closure News: Due to the issue with water supply, school is closed tomorrow.
Bristol Water say the boil water notice is likely to be in place for at least 48 hours.
Posting on their website on Thursday night, Bristol Water wrote: "One test result from raw water quality samples taken at Clevedon treatment works detected Cryptosporidrum.
"The treatment works has been taken out of operation and the water is being supplied from a different treatment works.
Thara Raj, Consultant in Health Protection for Public Health England South West said: "We would remind people in the affected areas to follow the advice from Bristol Water and boil their drinking water and allow to cool before use.
"If people feel unwell or experience symptoms of diarrhoea and vomiting they should contact NHS 111.