Canberra has agreed to extend a 300 kilolitre-a-day lifeline to the New South Wales country town of Braidwood, which has almost completely dried up.

Key points: Braidwood entered level four water restrictions last week, after years of drought

Braidwood entered level four water restrictions last week, after years of drought The local council says it is no longer able to pump water from the Shoalhaven river

The local council says it is no longer able to pump water from the Shoalhaven river The ACT Government has agreed to send water to the town for up to six months

Braidwood was moved onto level four water restrictions last week, after it became unable to pump water from the Shoalhaven river, which has stopped flowing.

Chief Minister Andrew Barr said the ACT Government agreed to a call for help from the region's mayor, who has warned that without rain, Braidwood will be waterless within the first few months of this year.

"It can't be a forever thing ... but it will help Braidwood out in what's been a difficult time," Mr Barr said.

"[It will] buy them some time either for more rainfall, or for the council and NSW Government to work on a longer-term, permanent solution.

"It is not only the right thing to do, but it reflects our community's values around supporting our region."

No water, and no tourists as fires raged

The town of 1,700 has weathered a hard summer, as massive fires burned to its east and west, the Kings Highway closure cut off its tourist thoroughfare, and it entered its third year of drought.

Farmer Mark Horan said Braidwood was suffering.

"It's very difficult, the town not only on the agricultural side is struggling, but the town itself and the cafes have certainly felt the effect of these fires," he said.

Mark Horan said Braidwood is likely the driest it has ever been. ( ABC News: Jordan Hayne )

Mr Horan said the recent fires had also forced many farmers who had been hanging on through the drought to finally destock.

"People that had held on to their stock and fed and carried on for two years, many of those people now have actually been burned out, and those cattle have gone on a truck and gone off to saleyards as well," Mr Horan said.

"I would be very surprised if we've got any more than 30 per cent of the livestock in the district that we usually have."

Braidwood has been particularly dry and dusty since November, when water restrictions first began.

Mr Horan said locals well understood the need to make what water remains last as long as possible.

"People are certainly aware of it," he said.

"I've been here 25 years, I've seen the river stop three times now— and this is probably the driest we've seen it."

Braidwood supply 'just a day's water' for Canberra

The Cotter dam still holds around 130gL of water, 47 per cent of its current capacity and about 65 per cent of its pre-expansion capacity. ( ABC News: Greg Nelson )

The ACT has agreed to truck in 250 to 300 kilolitres per day for up to six months, with the costs of the transport to be covered by the NSW Government.

But even if water is sent for the full six months, it would amount to just a single day's worth of water consumption in Canberra.

The ACT has enforced permanent water conservation measures since the Millennium drought, which require people to water gardens after 6pm or before 9am.

But an expansion of the Cotter Dam after that drought means that Canberra is under far less pressure to implement water restrictions.

"We are in a position to be able to support (Braidwood) because, and only because, a decade ago we made the decision to significantly expand the capacity of the Cotter Dam," Mr Barr said.

"[We have] two-and-a-half to three years worth of water supply for the needs of Canberra and Queanbeyan if there was no further inflow — if it never rained again, we would have that level of storage."

Mr Barr said there had been no other requests for water from the surrounding region, but if the situation worsened for nearby towns that Canberra was in a position to consider further help.

He said Canberra itself would have to decide by winter this year whether or not to implement water restrictions for next summer.