A downpour of rain drenched the Chaffey Dam catchment on Monday night, sending water surging into the dam and boosting its capacity past the 35 per cent milestone.

Although that should trigger Level 2 water restrictions for the city's residents, the bubble was burst when Tamworth Regional Council water manager Bruce Logan announced we would have to wait.

But, that's because bucket loads of water are still flowing into the dam and more rain is forecast to fall in the region, meaning when a decision is made early next week, it could send the city diving straight back to Level 1.

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"By that time the storage has reached a stable point and we will have seen the best of the inflows we're going to have, so we'll make a decision then on what restrictions should be," Mr Logan said on Tuesday.

"If the dam gets above 40 percent, which is possible with this latest inflow, that's obviously a different level of restrictions that Tamworth should be on."

Tamworth's main water supply was sitting at 38.2 per cent on Tuesday afternoon, and the city remains on Level 3 rules.

More than 4,000ML of the precious resource - 160 Olympic swimming pools' worth - had gushed into the dam by Tuesday.

If the supply hits 40 per cent, it will be back to fixed sprinklers - the stuff of distant memory - for Tamworth, Moonbi and Kootingal.

It's been a year since we had such relaxed water rules, but Mr Logan said even to go back to Level 2 would add to the festive feeling.

"I think it's a great Christmas present for everyone," he said. "Whether you're a farmer or a resident in the region, rain is always very, very welcome."

Tamworth Regional Council is set to make the official call next week.

The news was watered down when Mr Logan reminded residents it's no excuse to open the floodgates.

"The message never changes for me regardless of the level of restrictions we're on, we should always try and conserve water," he said.

More than 92mm of rain was clocked at Tamworth airport overnight on Monday, marking the wettest 24 hours the city has waded through in almost nine years.

A moderate flood warning was issued by the Bureau of Metoerology (BoM) for the Peel River on Tuesday afternoon, with the river expected to peak in town at about 6pm.

The downpour saw Dungowan Dam hit 100 per cent, and it was spilling.

Council will decide whether to source Tamworth's town water from Dungowan or the flowing Peel, to keep the plug in Chaffey for as long as possible.