THE federal and state governments will fund a $480 million Dungowan Dam to help shore up water security for Tamworth in the future.
The prime minster and NSW premier, along with their respective deputies, made a $1 billion water infrastructure announcement, on Sunday.
The package includes funding for Wyangala Dam in the state's central west and a dam on the Mole River near Tenterfield.
"Together we'll deliver a $650 million upgrade of Wyangala Dam in the state's Central West and a $480 million new Dungowan Dam near Tamworth," Scott Morrison said.
"Our 50/50 investment with the state government in these priority large-scale water infrastructure projects will free up NSW funding to allow them to progress critical town water projects across NSW.
"We want to get these projects underway because this is about water supply and security.
"These projects don't happen overnight but we're working as quickly as possible to get all the necessary work done so we can start digging.
The premier Gladys Berejiklian said these projects would be the first new dams built in state since Split Rock Dam was constructed in 1987.
"Dams and other water infrastructure are an important part of the mix when it comes to increasing supply and reliability so that NSW's water supply is more resilient to the terrible drought being experienced across the eastern states," she said.
Formalised agreements between the Federal and NSW Governments outlining the timeframes will be finalised shortly.