Drought-stricken farmers along the Murray River will gain access to 100 billion litres of water at a heavily discounted rate to grow fodder in a landmark deal reached by the federal and South Australian governments.

Under the deal, worth almost $100 million, 100 gigalitres of water that was destined for South Australian farmers will instead be offered to farmers in NSW and Victoria for as little as 10 per cent of the market price. In return, the federal government will give South Australia $10 million in drought resilience funding and replace the water taken out of the Murray by paying to ramp up production at the state's desalination plant.

Prime Minister Scott Morrison, with Deputy Prime Minister Michael McCormack (left) and Minister for Water Resources David Littleproud (middle), said he was "stepping up" his drought response. Credit:AAP

The measure is expected to give between 4000 and 6000 farmers the chance to produce up to 120,000 tonnes of feed for animals, flooding the market with cheap product to drive down prices.

The Morrison government has also announced $15 million in education support for drought-affected communities, including $5 million for childcare centres.