Hundreds of millions of dollars will be spent on a pipeline from the Murray River to Broken Hill, in New South Wales' far west, to fix its water supply problems, the State Government says.

The city faces the prospect of running out of water in April next year, and the promised pipeline means it would no longer have to rely on the nearby Menindee Lakes for its water supply.

Broken Hill has been supplied with water from the Menindee Lakes system for about 50 years, but in the last decade it has almost completely dried up on two occasions.

The 270-kilometre pipeline will run from Wentworth, on the Victorian border, to the Broken Hill water treatment plant.

Authorities plan to supply the city with bore water from when the weir is forecast to run dry next year, through to when the pipeline is due for completion in 2018.

"Broken Hill's future has been secured," NSW Premier Mike Baird said.

"Having water is a critical part to any city and a regional city like Broken Hill needs security of water."

Deputy Premier Troy Grant said the investment would "give Broken Hill the opportunity not just to continue to exist, but to thrive".

The dry bed of Menindee Lakes, which had supplied water to Broken Hill for about 50 years. ( ABC News: Cherie von Hörchner )

"The struggle and the challenge and the agitation around the future of water security for this city has been a complex one, but a very important one that needed resolution."

The prospect of relying on bore water has been a sensitive topic in Broken Hill, with Water Minister Niall Blair making repeated assurances last year it would not be a permanent solution.

There has also been fierce opposition from some action group campaigners to all three of the options the Government had been considering to secure a water supply, including the Murray River pipeline.

NSW Premier Mike Baird said Broken Hill's future was secured. ( ABC News: Cherie von Hörchner )

Late last year, it was estimated a Murray River pipeline would cost about $380 million, but Mr Blair said the final cost was yet to be determined.

However, the pipeline will be funded as part of a previously announced $500 million package for Broken Hill water infrastructure using funds the Government set aside last year from its sale of electricity infrastructure.

Mr Blair said Broken Hill used about 10 gigalitres of water per year.

"That's an allocation that we will make sure we secure out of the Murray system and that will continue to allow Broken Hill not only to continue with business as normal, but also to prosper, and hopefully expand into the future," he said.

Before the announcement, SA Premier Jay Weatherill said he hoped NSW's decision on the water supply issues would not have a negative effect on the Murray River.

"If it involves depleting and degrading the resources of the river, then obviously it'll be a source of great concern to us," he said.

"We're always wary when we hear an upstream Premier talking about the river Murray because, generally speaking, they've spent most of their career depleting and polluting it."

The NSW Government said 240 jobs would be created during the construction of the pipeline.

The Menindee Lakes water system. ( ABC News: Cherie von Hörchner )

Questions unanswered about Lower Darling crisis

Growers downstream of the Menindee Lakes are also facing a serious water shortage, with the Darling River almost entirely dry between Menindee and Wentworth.

Residents in the area have been enduring declining water quality and last year proposed to the State and Federal governments that they rip up their crops and sell back their water entitlements.

There has been hope that citrus and grape growers along the pipeline route would be able to tap into it for irrigation and stock.

"At this stage what we are concentrating on is securing the long-term water supply for Broken Hill," Mr Blair said.

"The best thing that we can do for the Lower Darling producers, and other communities that live along there, is to make sure that we have a healthy river system.

"[The announcement today] goes a long way towards ensuring that as inflows do go down the Darling, we can allow them to continue on, where possible to support those communities in the Lower Darling."