Blackburn with Darwen Council has acknowledged the risk of an imminent lockdown being imposed on the town and is urging residents to help reduce the spread of the disease.
Council leader Cllr Mohammed Khan said: "We are in danger of a local lockdown if there continues to be an increase in cases. Nobody wants this. Please, I urge you to follow the guidelines to protect your families, friends and your community."
Cllr Khan has spoken out after hundreds of people were told to self-isolate after attending a funeral service at a Blackburn mosque.
Around 250 worshippers who attended Jamia Ghosia in Chester Street have been told to quarantine after the imam of the mosque, who led prayers at the funeral on the afternoon of July 13, tested positive for Covid-19.
Cllr Khan said: "I feel it’s my duty to remind residents that sadly at the start of this pandemic, three well known and well respected local Imams died from Coronavirus.
"There have been a number of our borough’s residents who have sadly also lost their lives due to this deadly virus.
"Their families and loved ones have been left absolutely devastated by their deaths and my heart goes out to them all.
"Their sad and untimely deaths should not be in vein. Their passing should serve as a warning about the very real dangers and the severity of Covid-19 but also as a very clear reasoning for limiting funeral and wedding guest numbers as per the government guidance to a maximum of 30 people.
"This virus spreads very quickly, so we all need to work together to control this virus."
The outbreak at the mosque has sparked widespread concern and has even been reported to police as a possible breach of lockdown rules.
Lancashire Police said it would not be carrying out an investigation, despite current coronavirus guidelines restricting funerals to a maximum of 30 people.
The force said it is a matter for public health officials to deal with and has referred it to the local authority.
A police spokesman said: "We have been made aware of funeral prayers taking place with more than 30 people attending in Chester Street, Blackburn just before 2pm on July 13.
"The matter has been referred to the local authority as it is a public health issue."
The mosque said future funeral prayers would be limited to 30 people and said it has advised those who attended the funeral to self-isolate for seven days or attend a local coronavirus testing station.
The Council said an investigation into the outbreak at the mosque is underway.
Denise Park, chief executive of Blackburn with Darwen Council, said: "We are working directly with the mosque to establish the full facts so we can decide on next steps.
"The basic official advice is that anybody who has been in close contact with someone who has tested positive for Coronavirus to self isolate for 14 days."
She also said the Council is working with the Government to arrange for the national test and trace system to be better utilised to help reduce the infection rate in Blackburn.
She added: "We are in discussions with the central test and trace system about how we might be able to help improve the uptake with more local action, utilising local skills, knowledge and contacts.
"We will be able to provide a further update once we have an agreed approach."
These include limiting visitors from another household to two, wearing face coverings in all enclosed public spaces such as shops, workplaces and libraries, and not hugging or shaking hands outside the immediate household.