Water Minister Barnaby Joyce says allegations of "water theft" in far western New South Wales are a serious concern, but the Commonwealth will not step in to investigate.

Mr Joyce has spoken with his NSW counterpart Niall Blair, who has already ordered an independent inquiry into the State Government's handling of the issue.

On Monday, the ABC's Four Corners revealed allegations that some farmers in the Barwon-Darling valley had taken more water from the river than they were entitled to.

It also revealed that meters had been tampered with, masking the amount of water pumped into some farm dams in the region.

The NSW government has been accused of failing to pursue those allegations, despite being presented with evidence by one of its own former water compliance investigators.

The state's most senior water bureaucrat has referred himself to the state's anti-corruption watchdog, after a recording revealed he had offered to share confidential government information with irrigation lobbyists.

The constitution gives the states responsibility over water issues, and Mr Joyce said he wanted to see the result of the ICAC and independent investigations before taking further action.

"I don't think anybody is denying the potency of ICAC in NSW, [and they have the right] to call other people who they think need to be investigated," Mr Joyce said.

"The issue is overwhelmingly an issue for New South Wales and the process is now being investigated by a person outside government, who is independent of government."

Mr Joyce said he and the full council of Murray-Darling Basin state water ministers would consider the findings of both the independent investigation and any ICAC proceedings.

"If all the ministers there, if they're not happy with the process, then we can have the discussion [about what to do next]."

The states retain their constitutional responsibility for water, and it remains unclear what power the ministerial council or the Commonwealth would be able to exercise if they disapprove of the investigations or their findings.

Labor water spokesman Tony Burke said Mr Joyce's response was "the worst of all" for the Murray-Darling Basin.

"The problem for 100 years was that the Murray-Darling Basin was treated as a state issue rather than as a complete river system," he said.

"What Barnaby Joyce has said today effectively unwinds the entire reason for Murray-Darling reform in the first place."

Barnaby Joyce says he wants to see the results of independent investigations. ( ABC News: Mark Moore )

Mr Burke said South Australia's call for a judicial inquiry "makes sense".

"The reason there needs to be something more than a state response is that the allegations that were aired on Monday night all go to the integrity of how NSW has behaved, whether or not the NSW Government has been strategically getting rid of their compliance capacity and undermining any enforcement capacity in the Murray-Darling Basin," he said.

"When those are the issues, and they all have a federal implication, you can't just say 'Well, we'll let the NSW Government sort it out for themselves'."

Mr Joyce would not be drawn on whether he believed the Commonwealth minister, or the Murray-Darling Basin Authority, needed stronger enforcement powers to deal with issues such as those raised by Four Corners.

He said that issue could be dealt with "once NSW goes through their process, whether that's ICAC, the independent report, any criminal actions".