New England MP and Water Resources Minister Barnaby Joyce made the announcement in Tamworth yesterday with further funding also pledged towards increasing water security for the Tenterfield and Walcha districts.

A total of $850,000 will be used for a feasibility study into a new dam on Dungowan Creek, downstream from the existing one, while another $550,000 will fund a study into a new dam on the Mole River, west of Tenterfield.

Both projects were submitted by the NSW government under the National Water and Infrastructure Development Fund.

Mr Joyce also made an election commitment of $100,000 towards an investigation into improving Walcha’s water security, but emphasised it had nothing to do with the long-talked about Apsley Dam.

That project, Mr Joyce said, was costed at about $3.5 billion, which “I don’t have”.

Tamworth Regional Council announced earlier this year it was investigating options to secure the area’s water supply into the long-term, with a new bigger Dungowan Dam one of the things on the table.

A new water storage, which has an estimated price tag of $150 million, would also solve the council’s problem of how to best deal with a 2014 report that showed in the event of the failure of Dungowan Dam, dozens of lives could be lost across the valley.

The results of the study, required by the NSW Dams Safety Committee, sent shock waves through the community as council wrestled with ways of addressing the findings, including the relocation of the owners of 11 properties considered at high risk.

“The Dungowan Dam would resolve any ongoing safety standards with the existing dam and provide a significant increase in Tamworth’s water security, with significant flow-on benefits to other water users in the Peel and Namoi catchments,” Mr Joyce said.

Yesterday, Tamworth Regional councillor James Treloar welcomed the funding announcement and emphasised how vital the Dungowan supply already was to the district, providing 40 per cent of Tamworth’s water in a good year.

Cr Treloar said the tough water restrictions currently in place across the city only highlighted the increasing importance of water security issues.