The state government's Water Accountability and Transparency Bill will mean all 135 members of parliament will have to declare the type of water licence they own, and if they trade water.

NSW Water Minister Melinda Pavey said it would also begin the process of reforming the public register, but still protect the privacy of farming families.

"This bill will address anger about water ownership and decision making in our communities, caused by miss-truths and conspiracy theories," Ms Pavey said.

"For too long, the Shooters have been peddling conspiracy theories about NSW Nationals being great water barons, acting in secrecy for our own benefit, our communities deserve better.

"Pitting farmer against farmer for political gain is disgraceful and our communities have been doing it hard enough without people like the Shooters planting these conspiracies within our communities."

Two amendments moved by Shooters, Fishers and Farmers MP Helen Dalton to have politicians retrospectively declare a five-year history of water interests, and any water owned by their spouses, were shot down in parliament.

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Ms Dalton had introduced her own, similar bill in October last year that she argues created more transparency with a publicly searchable register, but it lapsed due to COVID-19 delays.

"I'm an irrigator, I've declared my water entitlements and land and I'm happy to do that - I would like across the board for politicians, celebrities and international interests to all be public knowledge," she said.

"Applying for a water licence is easier than opening up a bank account, there's not much scrutiny at all.

"You have Nationals MP's blocking this all the way, who is she [Minister Pavey] protecting?"

The amendments were voted down 45 to 42, with all Nationals and Liberals MPs voting against it.

The original bill introduced by Ms Pavey has passed in the Lower House and will now be put to an Upper House committee for review.

Ms Pavey said that Nationals MP's books have always been open the public to see what ownership of water they have, and that it would be made clearer with water trading.