The water level in one of Melbourne’s most important dams has been restricted because of an “intolerable” risk that the dam wall could fail, causing catastrophic flooding as far afield as Melbourne’s inner suburbs.

Work to repair internal erosion and reconstruct the middle and upper levels of the towering embankment of the Upper Yarra Dam is due to start in September, in a job that is expected to take two years to complete.

The embankment of the Upper Yarra Dam needs to be repaired as it presents an intolerable flood risk. Credit:Justin McManus

An expert safety assessment of the reservoir found there is an unacceptable risk the dam wall could be breached in its current condition, with potentially devastating consequences.

“A dam breach scenario would be a catastrophic event which has immediate societal, environmental and financial cost to the community,” a report for Melbourne Water said.