For the third time this century, one of Australia's most iconic inland cities is facing a critical water crisis.

Broken Hill was founded in the 1880s and the city's riches beneath the ground played a pivotal role in helping power a new nation.

Its reputation as the birthplace of modern Australia was cemented earlier this year when it became the first Australian city to be heritage listed.

But more than a century after its birth, Broken Hill is yet to find a permanent water source to ensure its survival.

Located close to the border with South Australia, and more than 1,000 kilometres from Sydney, Broken Hill has an average annual rainfall of 235 millimetres, not enough to support a population of 19,000 people and the mining industry.

The town of Broken Hill does not have a reliable source of water and is facing another water crisis. ( ABC News: Ginny Stein )

Broken Hill is Australia's longest lived mining city. BHP Billiton, one of the world's largest mining companies, has its roots in the town.

With the region firmly in the grip of drought, and with its water supplies dwindling, authorities last year warned the city may run out of water by August.

Although recent rain extended supplies, it is a crisis that is yet to be solved.

The largest of the lakes which make up the Menindee Lakes storage system is now bone dry. ( ABC News: Ginny Stein )

The Menindee Lakes system is a chain of shallow freshwater lakes connected to the Darling River to form a storage system.

The system was originally built for town water supplies, river flows and domestic requirements, irrigated industries and environmental flows.

In the 1950s multiple weirs and a concrete spillway were built across the seven-lake system.

When full, the Menindee Lakes are more than three times the size of Sydney Harbour.

But over time, the enormous shallow dams which began as little more than natural depressions that filled during flood events, have silted up.

Lake Menindee - the largest of the lakes which make up the Menindee Lakes storage system - is now bone dry.

A drilling crew sets up a drilling rig to search for ground water near Menindee. ( ABC News: Ginny Stein )

Why is Broken Hill running out of water?

Australia is becoming increasingly dry and with population growth there is increased demand for water.

In times of crisis, the policies of the Federal and New South Wales governments have been questioned.

The Murray Darling Basin Authority works with Federal Government agencies to manage and share the water that flows through New South Wales, Victoria and South Australia.

The New South Wales Government takes over the control of the lakes when the water level drops below a certain volume.

The simple truth is the region needs rain.

Workers watch a water drilling rig as it drills into the earth near Menindee. ( ABC News: Ginny Stein )

The search for a solution to Broken Hill's crisis that does not involve rain is now underway.

The only certainty so far, is that no-one knows what the solution is.

Though bore water is essential in the region, there are people who oppose it.

They fear that relying on bore water may lead to authorities giving up on maintaining the lakes system for recreational use.