Farmers who don't use all of their annual water allocation are able to carry the excess water in to the following term, however the NSW government has implemented a temporary pumping restriction.

WaterNSW executive manager system operations Adrian Langdon said the restrictions were required so that critical needs - drinking water for towns and cities - could be delivered within the valley.

"This drought is among the worst on record as far as inflows go in some of our northern dams, and water authorities are taking the tough steps necessary to ensure that critical needs including town supplies continue to be met," Mr Langdon said.

In the Upper Namoi, farmers will only be able to apply for 75 per cent of their carryover water, while in the Lower Namoi, farmers won't be able to apply for any.

The suspended carryover water will be reserved in drought sub-accounts and made available when future inflows allow.

Where possible, priority will be given to high-security licences held by large employers or important economic drivers, however town supply remains top priority, Mr Langdon said.

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The restrictions also apply in varying degrees to water users in the state's hardest hit northern river valleys, where intense drought has reduced dam inflows to record lows, and the Lachlan valley in the state's Central West.

The restrictions follow the state government's announcement of urgent short-term capital works along the Peel River to extend the local water supply as far as possible.

A multi-million-dollar pipeline from Chaffey Dam to Dungowan village will be built, along with a series of weirs, aimed to reduce the amount of water lost in transmission from the dam to Tamworth.

It's estimated the pipeline could save Tamworth up to 17,000 megalitres a year.

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