Currently, untreated water from the dam is only suitable for irrigating Bathurst's parks and gardens but the new project will see a replacement pipe deliver that water to the Bathurst Water Filtration Plant at Gormans Hill.

There it will be treated to make it suitable for drinking water that will be used to supplement supply from Bathurst's major water storage, the Ben Chifley Dam at The Lagoon.

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It is one of two major projects announced on Monday to extend water security across the Bathurst region.

The other is a $5 million stormwater harvesting scheme that will capture stormwater run-off in a number of holding dams to be built across the city and then redirected for treatment.

Bathurst MP Paul Toole said the combined $10 million investment in the Bathurst region added to the NSW Government's investment across the state in pipelines, weirs and bores to help boost water security for local communities.

"Water security is the number priority for this government," he said.

"We've got something like a billion dollars for projects in this state.

"We've only seen a couple of months ago where we announced $2 million to Bathurst Regional Council and that was to go out there and look at options that were needed for water security across the area.

"Council came and gave a presentation to Water Minister Melinda Pavey about four weeks ago and she said she would have a look at those options and consider what was being proposed.

"Well, today I am announcing the NSW Government is going to be providing $10 million to Bathurst Regional Council to further adopt some of those measures."

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Council's engineering services director Darren Sturgiss said the stormwater harvesting alone could capture around 2000 megalitres of water a year - almost half the city's annual residential consumption of about 4800 megalitres.

"The stormwater harvesting, at this stage, will comprise a number of storage basins on a number of our catchments and ideally we will start with the first one on the Macquarie River itself and also Raglan Creek," he said.

"Then we will see that stormwater collected and pumped back to the water filtration plant to be used in our municipal water supply."

Mr Sturgiss said the plan was to have water from Winburndale Dam added to the city's water supply as soon as the pipe could be built, with that job expected to take a year.

He said the new pipe would also allow for water to be pumped from the Macquarie River back to Winburndale during high flow periods.

Council has already cut back on its use of the Winburndale water for irrigating local parks and gardens.

Mr Toole praised current mayor Bobby Bourke, previous mayor Graeme Hanger and council staff for the "amazing" work they done to secure new funding through Ms Pavey.

He said a pipeline from Chifley Dam to the water filtration plant remained on the agenda, along with again raising the Chifley Dam wall.

But he also said building a new dam in the region should be considered.