Council's Manager of Water and Sewer, Wes Trotter said council is in the pre-planning stage for the potential plant, in case council is forced to go to level six emergency water restrictions.

The news comes after NSW Water Minister Melinda Pavey said the government was also considering reverse osmosis plants for coastal communities, including Forster on the state's Mid North Coast.

However, Mr Trotter said the region is in a good position for the future supply of water and level three water restrictions could be downgraded to level one within a year.

The Steuart McIntyre Dam is at 60 per cent capacity and it's expected to keep increasing, given the way the river has been flowing.

The Macleay River had stopped flowing for weeks but recently reached a peak flow of 17,000 megalitres a day.

This was due to heavy rainfall in the Upper Macleay, which has allowed council to return to pumping water from the Sherwood Borefield.

Mr Trotter said the main issue regarding drinking water supply, relates to its quality.

The dam's water is safe for residents to drink, however there have been occurrences of algae activity at the Steuart McIntyre Dam in the past.

The council recently received a $4 million NSW Government grant to initiate an emergency treatment plant, to mitigate the risk of algae outbreaks in the future.

Completion of the plant is anticipated to be in the second half of 2020.

Mr Trotter said the widespread supply of recycled water to residential properties is currently an expensive and unobtainable goal.

Recycled water is highly treated wastewater, that is free from bacteria, viruses and other pathogens.

Council does have a recycle system infrastructure in the South West Rocks area, however it does not have approval for dual reticulation use.

Mr Trotter said the plant is required to undergo modifications and state government audit processes, before it can be approved for use by residential properties.

Mr Trotter said ideally recycled water would take pressure off the drinking supply, through its use for sport field irrigation, washing clothes, outdoor use and flushing of toilets.

Unfortunately the infrastructure to see such a project come to fruition would cost an astronomical amount.

"The production of recycled water is far more expensive then supplying safe drinking water," he said.

"At the end of the day water utilities and users have to be able to pay for that."

Council currently supplies treated effluent to a number of golf courses, Warwick Farm Racecourse and one farm.

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