Just two weeks after the $40 million, 19-kilometre pipeline won planning approval, contractor MPC Kinetic started work on a pipeline to the Dungowan Recreation reserve on Thursday.

The new connection will replace the 70-year-old Dungowan pipeline, which is long past its prime and frequently fails.

But the new pipe will also serve as the city connection for the new Dungowan dam, if and when the project is dug.

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Water minister Kevin Anderson joined Tamworth Mayor Russell Webb to announce what the Tamworth MP called a "red-letter day".

Mr Anderson said the project would supply secure water to the region "for many many years to come".

"Today marks the start of what will be probably an infrastructure project that we will not see in our lifetime repeated," he said.

"Today we mark the start of a pipeline that will carry the lifeblood of this city for the next generation-plus, for those who will come after us."

Councillor Webb said the pipeline was a "keystone" for future jobs development.

He acknowledged that the project will cause inconvenience among residents as it winds its way through the streets of Calala.

But it's all worth it, he said.

"When you think about it, there is not a project in this nation that gets built without some impact," he said.

"The impact will be mitigated to the best ability of the people putting the pipeline in.

"Yes, there will be inconvenience from time to time, but let's think about the long-term benefits, let's not think about the short-term inconvenience."

Mr Anderson clarified that every drop of water in the new Dungowan Dam would go to the community of Tamworth, one way or another.

"It will be for the ratepayers; the town itself and there will also be increased security for the agricultural sector and the environment," he said.

"So it stays right in this basin."

Many of the details for the new scheme remain confidential, until the project's business case goes before cabinet.

The final cost for the project, which is expected to have blown out from the initial estimate of $484 million, will be revealed in the project's environment impact statement, he said.

The first stage of the pipeline project will connect the Calala Water Treatment Plant with the Dungowan Recreation Reserve. It is expected to take about 18 months to build.

The full 55km pipeline will connect the new Dungowan Dam to the Calala plant.

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