Work has finished on Walcha's $11 million dam which will soon quadruple the town's overall water supply.

The new 300 megalitre dam is the size of 120 Olympic swimming pools, and Walcha mayor Eric Noakes says it's a giant leap forward in securing safe and reliable water for the long-term.

"Walcha isn't focused on growing its population like Tamworth, so this should keep our water security set for the next 40 years at least, if not even longer," Cr Noakes told the Leader.

Construction on the dam started in October 2022 with the NSW and Australian governments providing $9 million and $2 million respectively for the project.

Though it took a few more months to complete than expected, Cr Noakes said finishing the project within budget "in an environment of labour shortage and financial pressure" is a credit to council staff.

Main works on the dam finished in November and an official opening was held on December 2, 2023.

But the new dam isn't ready to transform Walcha's water resources just yet.

It still requires an upgrade to its pumping station before it becomes fully operational.

The upgrade is currently underway - to finish in early 2024 - and will add new pipework to fully connect the dam to the town water supply.

NSW Minister for Water Rose Jackson said the new dam is finishing construction at just the right time.

"This is one of the most important water infrastructure projects in the region's history, providing a secure water supply to residents and businesses as we brace for the next dry period," Ms Jackson said.

"This a major win for Walcha, and the latest example of what can be achieved through close working partnerships with local councils and the federal government."

During the most extreme drought on record in 2019, Walcha's water supplies hit record lows and residents and businesses were placed on severe water restrictions.

Federal Minister for the Environment and Water Tanya Plibersek said the new dam will safeguard the town's access to drinking water even during prolonged dry periods.

"Having survived the harsh realities of drought, communities like Walcha know that water is our most precious resource," Ms Plibersek said.

"Increasing the town's water storage by four times the amount it was when the last drought hit will help them to prepare for the dry summer ahead."

Cr Noakes thanked both water ministers for supporting the new dam, as well as Walcha's local MP Adam Marshall and federal MP Barnaby Joyce for advocating the project back in 2021.

"The Walcha community will always be grateful for their lobbying and support. When the pumping system is complete early 2024, and the storage is full, our residents should never suffer the harsh water restrictions we endured during the last drought," he said.

The dam has been built on a small tributary adjacent to the MacDonald River, 16 kilometres from existing water infrastructure.