With towns across New South Wales at risk of running out of water within months, there are renewed calls for an urgent upgrade of water storage infrastructure.

With dam levels at near-record lows, water restrictions are now in force across many regional areas, while Sydney, Blue Mountains and Illawarra residents had level one restrictions implemented on June 1.

Warragamba Dam, which supplies water to Greater Sydney, is at 53 per cent capacity, while Burrendong Dam in the central west is at 5.7 per cent.

Keepit Dam, near Tamworth, has fallen to just 0.9 per cent capacity.

"We have one of the most unprecedented droughts in the state's history and this water supply issue is hitting both urban and regional areas hard," said Linda Scott, president of Local Government NSW.

"There are record low inflows and people are crying out for help," she said.

"Councils need more help from State and Federal Government to secure water supplies."

Among the ideas raised are building more dams, with Deputy Prime Minister Michael McCormack among those pushing for new dams to be constructed.

"Sometimes it's difficult working with states, so the National Water Grid Commission has been established to take the politics out of it," Mr McCormack said.

"We want to put the science and stakeholders first, including the states and territories, to get dams built."

In opposition, the Coalition set up a dam taskforce in 2011, and a Government White Paper in 2015 promised more dams but there hasn't been a new dam built in western NSW since 1987.

Water levels in the Darling River at Wilcannia, NSW, continue to fall despite recent rain. ( ABC Rural: Michael Condon )

Hydro scheme

As well as dams, there is also a push in New South Wales to look overseas to what other countries are doing to manage water supply.

One example is China, where a north-south water transfer scheme was established in an attempt to distribute water to areas requiring it.

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"Years ago their government decided that the southern part of China was getting overpopulated," said Ashish Sharma, Professor in Civil Engineering at the University of NSW.

"They needed to be able to transport water from the part of the country that is water rich to the part that is dry and essentially enhanced farming options in it.

"They started work on a plan 30 years ago. Now that plan is partly in place and it's been extended more and more now that this is a grand scheme."

Professor in Civil Engineering at UNSW Ashish Sharma is an advocate of the Snowy Hydro Scheme. ( Supplied: Snowy Hydro )

While not advocating for such a scheme in Australia, Professor Sharma said there was a need to start the dialogue about what could be viable and productive options to pursue in Australia.

"There are engineering solutions like the Snowy Hydro Scheme, turning rivers inland or north-south pipelines.

"They would cost hundreds of billions of dollars and could take 30 years to build.

"I'm an advocate for the Snowy Hydro Scheme in Australia and there are similar schemes around the world.

"These are very formidable and very significant projects but they were implemented, and as a result of that we are benefiting nowadays."

The New South Wales Government has proposed raising the wall of some dams, including Wyangala in the state's central west.

It would see the dam wall raised by a height of 10 metres at a cost of $650 million.

One idea is to build a dam on the Maryland River and pipe the water to the Condamine River. ( Supplied )

Pipeline proposal

States are being encouraged to work together better in an effort to secure water supplies.

On the New South Wales-Queensland border, council representatives recently met to discuss water security in south-east Queensland.

Among the ideas raised was a plan to build a dam on the Maryland River in the upper Clarence catchment, and pipe the water to the Condamine River.

"It's a potential long-term solution," said Toowoomba Mayor, Paul Antonio, who was at the meeting.

"We're looking for a regional solution to a national issue.

"This would not come to pass for some years, and I think by working together across northern New South Wales and southern Queensland we probably could help each other.

Tenterfield Shire Councillor Gary Verri said the scheme could be a solution for regions facing the prospect of running out of water.

"The Maryland is a dry river, it has a sandy bottom, and the yield from that dam is only 21,000 megalitres, as opposed to 4.9 million megalitres that flows out of the mouth of the Clarence," he said.

"It's a little bit more than nothing what we would take out of the river system.

"It's a good fix because it really helps the whole system come through."

Residents discuss the water supply issue in Walgett, one of several NSW towns at risk of running out of water. ( Supplied: Sue Currey )

But not everyone is supportive of the proposal.

"I just think it's a pie-in-the-sky dream," said Nationals MP Chris Gulaptis.

"It's an emotive call for help when some of the country is in drought.

"The northern rivers, while it's not in drought, we're certainly not overabundant with water.

"At the moment the Clarence isn't freely flowing.

"I understand in the upper reaches, it's only just flowing, you could just about step across it.

"There's no water to demand and it certainly wouldn't help anyone else and it would do more harm to the Clarence."