ATTUNGA will move to level two water restrictions for only the second time ever on Monday, following a drop in the town's usually reliable groundwater bores.
A month ago, council shut the Attunga bulk water filling station, as its frequent use by water carters was putting too much stress on the aquifer supporting the town.
The bulk filling station was outstripping total residential consumption in the village.
However, Tamworth Regional Council water director Bruce Logan said the water carters were not to blame for the jump in water restriction levels.
"The amount of water being taken from there was more than the village was using - that was obviously untenable, so we stopped the bulk filling station," Mr Logan said.
"But now, even so, we've seen in that time over the last two weeks, Attunga's use is fairly high and more importantly we are seeing water levels in the two bores dropping."
Attunga's groundwater supply is deemed as one of the most reliable in the council area.
However, Mr Logan said the council expected the bores to drop once the Peel River's flow was cut off.
"We asked experts to have a look at that and to see what level of connectivity there was between the bores and the river," Mr Logan said.
"They came back and said there didn't appear to be all that much connectivity, which at the time was good news.
"But the proof is in the seeing and at the moment, we are seeing some reduction in water level at the Attunga bores.
"Whether that continues, whether that stops and stabilises, we're yet to see."
Tamworth's back up bores on Scott Road also connected to the Peel River and Mr Logan said the council had already seen a reduction in their yield since the river stopped.
The last time Attunga was on level two restrictions was for 10 months between November 2014 to September 2015.