The cooler weather has significantly improved the dam's water quality and the change in supply will help council to delay implementing stricter water restrictions.

Read more: Kempsey Shire moves to Level 2 water restrictions

Council's general manager Craig Milburn said the flow levels in the Macleay River have dropped significantly in recent weeks and are now hovering around the trigger point for Level 3 water restrictions.

"The cooler weather has resulted in a decline in algae growth that we've experienced in Steuart McIntyre Dam in the past and a return to normal water conditions," he said.

"Sourcing water from the dam will enable council to continue Level 2 water restrictions for longer within our current water extraction licence limit."

Under the change, council will pump up to 8.5 megalitres a day from the Sherwood Borefield to top up the dam where the water will be treated before being distributed to reservoirs across the Shire.

Residents in Kempsey and the Lower Macleay may notice a slight difference in the taste of the water with the change in supply source.

The changeover will also create some turbulence in the water pipes that can result in temporary discoloured and turbid water. If this occurs, householders are advised to run a tap into a bucket until the water turns clear and then distribute the excess water for outdoor use.

"Current water quality in the dam is compliant with the Australian Drinking Water Guidelines and is tested daily," Mr Milburn said.

"We will continue to closely monitor river flows and water consumption and advise the community of any further changes."

Level 2 water restrictions will remain in place until further notice.

Council has a range of legislated enforceable measures available but is asking residents and business to adhere to the restrictions to help manage local water usage.

For some handy tips for saving water in and around the home visit www.kempsey.nsw.gov.au/tips

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