Gold Coast City Council has today been revealed as the culprit behind this week's Optus outage after excavations in a Queensland state water project severed an interstate fibre cable.

More than a million Optus customers were unable to use mobile and land line telephones, or reach Web sites outside of the state for more than four hours, while repair crews rushed to fix the damage.

To compound the issue, a second new, reported yesterday by Computerworld, blocked traffic on the remaining Optus inland backbone when the Stanthorpe Point of Presence (POP) failed.

Standard operational procedures including inquiries placed to Dial Before You Dig failed to alert staff to the presence of the fibre link.

Gold Coast City Council Acting Mayor, Councillor Daphne McDonald said the cut occurred after three separate inquiries into the location of the cable returned false information.

"As with all projects of this magnitude there is always the potential for the unexpected - despite comprehensive procedures in place," McDonald said.

"Present investigations indicate that despite having utilised services such as Dial Before You Dig the communications cable wasn't where it was expected to be."

The offending works is understood to be separate from a nearby project conducted by the Southern Regional Pipeline Alliance, to connect a desalination plant to the main South East Water Grid.

Investigations are continuing into the "root" cause of the incident, which involves the state government council, and managing contractor Abigroup which are both members of the Southern Regional Pipeline Alliance.

"With any incident of this size, where so many people are affected, it's critical to find out exactly what went wrong, why it happened and what can be done to make sure it doesn't happen again.

Optus announced yesterday it would evaluate claims for compensation on a case-by-case basis.