Hobart could soon face water restrictions and farmers are being asked to slash their water usage in half as the state's south supply buckles under demand.

Key points: Greater Hobart is using 10 megalitres of water more than it was a year ago

Greater Hobart is using 10 megalitres of water more than it was a year ago TasWater says its key supplies — including the Ridgeway Dam and Lake Fenton — are also running low

TasWater says its key supplies — including the Ridgeway Dam and Lake Fenton — are also running low Farmers on certain irrigation schemes in the south-east draw have been asked to halve their water use to protect the drinking supply

TasWater CEO Mike Brewster said demand in the city was about 10 megalitres a day — or enough water to fill four Olympic-sized swimming pools — more than this time last year.

He said water levels in the Ridgeway Dam, which collects water from kunanyi/Mount Wellington, had also had to be lowered for safety reasons and inflows to the city's alternative supply at Lake Fenton was low.

"At the moment we're struggling to keep up with supply so right at this minute it's a fine balancing act," Mr Brewster said.

He said the reason for the increased demand was not exactly clear.

"Maybe it's tourists coming in ... maybe it's drier than before and therefore there's been more watering of gardens," Mr Brewster said.

"It's sometimes very difficult to determine the root cause."

Tasmania's east coast has been experiencing some of its driest conditions on record.

Mr Brewster said it was possible Hobart could face water restrictions and that TasWater was consulting with the Government and had yet to make a decision.

"Right now the biggest focus we've got is on modelling scenarios and ensuring we're meeting our customers' expectations in terms of drinking water and giving whatever excess we can to the irrigators," he said.

TasWater wants to ensure there is enough supply to fight bushfires. ( ABC News )

Mr Brewster said water also needed to be kept in reserve for fighting bushfires.

"It's important we act prudently and ensure there's enough capacity in our key storages, particularly as we approach high fire danger days," he said.

"We've got to be consistently keeping up levels in the network because you never quite know when you do get a bushfire where it's going to hit," Mr Brewster said.

Farmers asked to conserve water

Tasmanian Irrigation has asked farmers under specific schemes in the south-east, including those in Richmond, Cambridge and Sorell, to halve their usage in an effort to conserve water.

Chief Executive Andrew Kneebone said demand from irrigators had been outstripping supply by 6 megalitres of water a day.

"We need to protect the levels of water in our balancing storages and stabilise them while we recover," he said.

TasWater says it is dealing with a balancing act. ( Rose Grant )

Mr Kneebone said the Rekuna and Daisy Banks dams, near Campania and Richmond respectively, were less than half full, "significantly down" on previous years.

TasWater is trying to minimise the impact on farmers.

"We understand that irrigators in the area have high-value crops, including grapes and green leaf crops, that are highly dependent on irrigation water so we are doing all that we can to manage supply," he said.

Grower warns crops, jobs in balance

Colin Houston, who came out of retirement to start a business with his son, says the cuts are "the worst news in 20 years". ( ABC News: Kylie Rollins )

Veteran vegetable grower Colin Houston, who relies on irrigation to grow lettuce and cauliflower in the state's south-east, said poor infrastructure was to blame for the shortage.

His business uses about 200 megalitres annually, and Mr Houston said the restrictions could send him broke if they remained in place over the medium-to-long term.

"The whole of the south-east irrigation scheme is now in jeopardy," he said.

"If the restrictions stay we'll have to reduce our crops and reduce our staff, so we have to work as a team, TasWater, TasIrrigation and farmers to utilise the water the best we can.

"We have obviously got to be okay with the 50 per cent cut until we get our storages up.

"Short term we need that water to keep our employment and keep our markets going."

Council disappointed with short notice

The Sorell Council held emergency talks with Tasmanian MPs today in the hope of finding a resolution that would not disadvantage farmers in the municipality.

Mayor Kerry Vincent said the council was not consulted.

"The main concern for me is how late we found out about it that there was a serious issue with supply over the summer months," he said.

"The disappointing thing about the whole thing is that a lot of people weren't aware there was a shortage coming.

"It's only just coming to light so there is a lot of phone calls taking place from a lot of concerned people in the agriculture game and we as a council are doing what we can to support them."