WORK is expected to start on the almost half-a-billion dollar Dungowan Dam project now that the contracts have been signed, sealed and delivered.
The state and federal governments have partnered with WaterSecure to take on the project that is expected to shore up the city's dwindling water supply.
Deputy Premier John Barilaro and Water Minister Melinda Pavey signed the contract on Monday at the dam site, but said in the short-term Tamworth's water security lay "in the hands of the Gods".
"This is something we haven't done here in NSW for many a long, too long a decade and that is build dams," Ms Pavey said.
"What we have experienced, and no more severe than the north west of NSW with 1.5 per cent of normal inflows during this drought, we need to guarantee the water for our future, for our industries, our community and the environment."
Split Rock was the last dam built in 1987, so this marks one of the first major water security projects in about 30 years.
It's part of three state-significant projects including the Wyangala Dam in the Central West; and investigations into a dam near Tenterfield.
The pipeline from the new dam will start in October, and the ground should break at the same time next year.
The NSW government contributed $245 million and the rest came from the federal government, however, Mr Barilaro confirmed part of that would need to be repaid.
"We have a joint-funding program with the federal government, with some grants and loans," he said.
"it's a 50/50 arrangement, and over the period of construction or ownership of the dam we will be paying back a quarter of that to the federal government.
"There were many moments where I think a lot of the bureaucrats were telling us to walk away from it, when you think about the size of the dam and the cost you could argue that it's an extravagant amount of money. "The truth is, this is about water security at a level that we need."
The dam will be able to hold 22.5 gigalitres of water. It was welcome news for the community who have made it clear water security is a top priority, Tamworth Regional Council mayor Col Murray said.
"We're still on Level 5 restrictions after water restrictions for 16 months now," he said.
"The community has had enough and we expect our governments to provide the critical infrastructure."