It is expected to take up to 18 months before phase one is finished, which will see 21 kilometres worth of piping laid out and connected to the Chaffey Dam pipeline at Dungowan Village.

The piece of infrastructure will be 55 kilometres in length when finished, with phase two of the project seeing it linked to the new Dungowan Dam pending the business case.

Water NSW has not yet stated exactly when construction on the pipeline will begin, but has confirmed it will be before the end of the year.

It was a hub of activity on Tuesday morning at Calala Water Treatment Plant when the pipes were delivered, with a 30-tonne crane from local company Aldridge Cranes on hand to deal with the stream of trucks carrying the equipment.

There will be an emphasis on using Tamworth or New England-based companies throughout the construction period, with contractor MPC Kinetic being advised to use companies on the local business register.

The 5.7 metre, one-tonne pipes delivered on Tuesday will be used over a 1.2 kilometre stretch that will take the pipeline from the water treatment plant to the edge of town.

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Minister for Water, Property and Housing, Melinda Pavey, said the pipeline was a crucial aspect of the $484 million Dungowan Dam project.

"The pipeline is part of the new Dungowan Dam project, which is being jointly funded by the Australian and NSW governments," she said.

"This dam will increase the resilience of local water supplies and the capacity to meet the demands of Tamworth and the Peel Valley's agricultural industries.

"This forms part of once-in-a-lifetime critical infrastructure that will improve water security for the people and businesses throughout the Peel Valley for many generations to come."

State Member for Tamworth Kevin Anderson also emphasised the importance of the new dam, pointing to the struggles faced by the region during the recent drought.

"Chaffey Dam, the major storage for the Tamworth region, dropped to 14 per cent capacity in mid-2020," he said.

"Every step closer we get to delivering the new Dungowan Dam is a win for our community so I'm happy to see we're getting on with it."

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