Tamworth Regional Council has spent the last three years developing a plan for a new Water Purification Facility (WPF) which would clean up water from the city's three abattoirs and recycle it back to them for future use.

But with "too much uncertainty" surrounding funding and the timeline for the cutting edge technology, the city's biggest water user has decided to take matters into its own hands.

Council's director of water and waste Bruce Logan said Baiada Poultry had indicated plans to push ahead with its own purification plant which would be built as part of a new $300 million poultry processing facility in Westdale.

Mr Logan said the decision for Baiada to build its own facility came after the state government refused to fund council's own purification plant until a final business case had been prepared.

"That's not going to be finalised until the middle of next year," Mr Logan said.

"Baiada has said it can't afford to wait, there's too much uncertainty."

Without Baiada sending its water to the proposed council purification facility, Mr Logan said the original plan was no longer economically viable.

"Our facility is not going to be as good as we thought it was going to be and as a benefit to the community as we thought it would be, if the facility gets built at all," Mr Logan said.

A report going before council's next meeting sets out the benefits of council having full control of the water purification plant.

The report states council's existing expertise would be "better suited" to operate the facility, purified water could be made available to new industries which may set up in Tamworth, and any savings made in potable water could increase the city's security.

Plans for the council owned water recycling facility have been in motion since September 2021.

In October 2023, the Federal and NSW Governments announced a $6 million joint investment into developing the final business case for the purification plant.

But the state government has claimed it will not fund the project until the final business case is ready.

Mr Logan said it was "very disappointing" the delay in gaining approvals and funding for the purification plant has caused Baiada to abandon the council's plan and build their own facility.

"We had what we considered to be a very very good project, and through various delays and other matters, we've got the position now where Baiada can't afford to wait," he said.

"What are we going to do now."

Minister for Water Rose Jackson said she was aware of Baiada's plan to build its own purification plant which she deemed a "matter for them as a private entity".

Ms Jackson said it was important to note there are still other major abattoirs in the Tamworth area being considered as part of the business case.

"The advanced water treatment plant would be the first of its kind in regional NSW," she said.

"While the technology has been used elsewhere in the world, we need to look carefully at whether this is the right option for Tamworth."

Ms Jackson said she had been working closely with Tamworth council to accelerate work on the business case.

If Baiada presses ahead with plans to build its own purification facility council will continue to work with the state government to consider options for its own water recycling plant.

A five megalitre option to reflect the reduced demand for purified water, and a 12 megalitre facility which was originally proposed will continue to be investigated.

Mr Logan said information and research already prepared will not be lost if there is a change to the size of the proposed purification facility.

Tamworth councillors are also expected to discuss the water issue at the next council meeting on April 23.

Ms Jackson confirmed the state government would continue to work with Tamworth council and extensive community consultation was expected to be carried out in the next 12 months.