In August, Melinda Pavey wrote to Michael McCormack, asking if the $75 million put aside for Dungowan could be used on other water projects, including $23.3 million on a comprehensive business case "to get the project to the point where governments can make an investment decision".

This week, the Water Minister was in Tamworth to announce $39 million for the city's emergency pipeline and revealed she never got a response to the letter.

A spokesperson for Mr McCormack said the Commonwealth had been "advised" the NSW government would formally make a request, but was yet to receive it.

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"The Australian government will consider this request once the full details of the proposed projects are received," the spokesperson said.

"In the meantime, the Australian government's $75 million commitment remains on the table for a new Dungowan Dam."

Despite the apparent miscommunication, Ms Pavey said she'd had "great conversations" with Mr McCormack about the project.

"Be assured, there are good conversations going on with the Commonwealth about how we release some of that money," she said.

"We're talking with the Commonwealth now to do detailed work and designs to get [Dungowan Dam] progressed."

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Ms Pavey said "building a better [water] storage" was still her focus, however admitted it would take some time. "Going forward I want to secure a better Dungowan," she said.

"With the best will in the world, it takes at least 18 months to two years to get shovels or bulldozes in building the wall.

"There are a lot of planning requirements and Environmental Impact Statements we have to go through."

In the recent NSW budget estimates, Ms Pavey said the new pipeline was expected to extend Tamworth's supply by six months.

Water NSW is aiming to finish the project by early next year, while construction of temporary soil weirs in the Peel will begin in November.