Former Australian Federal Police Commissioner Mick Keelty was appointed to the role in August.

The Inspector General will investigate compliance, water theft and misconduct, as well as monitoring water recovery under the Basin Plan.

Water Minister David Littleproud said it was important for Mr Keelty to test the waters in river towns.

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"I've always said the people who operate the river should live on the river - and so should the people who police it," Mr Littleproud said.

"This will give the Inspector-General and his staff a real connection to the communities they serve."

Mallee MP Anne Webster said the Inspector-General's office would be a boon to the community.

"His staff will live in Mildura and will have a real understanding on how the plan impacts on the wider Sunraysia region," Dr Webster said.

"They'll take their children to the same schools, join the same football clubs share the same community as people who's livelihoods depend on water.

"This will also bring more professional jobs into Mildura, so more people can return here after they finish university."

The Inspector-General will set up another office somewhere in the Northern Basin.