The NSW government and Warrumbungle Shire Council have committed $1.2 million for research to overhaul Dunedoo's more than 100-year-old water network.

The government announced on 18 March that the research will look at "the most viable" upgrades to bring water standards up to the non-mandatory Australian Drinking Water Guidelines.

The government will cover about $930,000 to deliver a concept design by December 2026 with the local council contributing the remained.

Local business owners say poor water quality costs them in service and maintenance fees, and dries their skin.

"It's like sandpaper running through the pipes," Dundeoo Swan Motel owner Julie Anne said.

She drinks bottled water and is buying a water softener for the business, which she expects will cost $20,000.

The Dunedoo Swan Motel.

"I'm quite often - probably every six months - having to change the shower heads because of the build-up of calcium," Ms Anne said.

"Probably once a fortnight, we have to deep clean the bathrooms with things that will get rid of limescale and build up."

It's a similar story for one Dunedoo retail owner, who said they order water in for their coffee machine because the town water will wear it out.

"We let them (customers) know that we personally don't drink it, but we will still let people if they want," the owner said.

A government spokesperson said the early phase will probe solutions including new bores and a new water treatment plant.

They will also look at upgraded disinfection technology and "additional treatment processes depending on the quality of the bore water."  

The project will be tender-ready once the design is complete and is expected to deliver safer and more secure water for decades. 

"The system is no longer treating water effectively," said Lisa Hingerty, Executive Director for Infrastructure Development at the Department of Climate Change, Energy, the Environment and Water (DCCEEW).

"It’s vital we get this planning and development stage right, which includes completing all the appropriate checks and balances so the project is in a good position to progress to the tender phase."

Dunedoo's water treatment plant. IMAGE: Warrumbungle Shire Council

Motel owner Ms Anne said it was "fantastic" to hear a commitment to improve local drinking water, although she didn't understand the near 21-month timeline for the design.

A DEECCW spokesperson said there is no quick fix to Dunedoo's "complex" water woes.

"It’s essential we complete all the appropriate checks and balances," the spokesperson said.

"This early phase is a critical first step in any infrastructure project. It involves a meticulous evaluation that requires complex technical, environmental, and financial investigations.

"It focuses on understanding the specific requirements for new or upgraded water infrastructure, site opportunities and constraints, the preferred treatment type and design configuration and costs. 

"These investigations take considerable time to complete, and in this instance there is a complex set of challenges that need to be properly assessed before any infrastructure options are put on the table. 

"One of these challenges is the quality of the water in Dunedoo, which requires advanced technology to treat it effectively to a high standard that meets Australian Drinking Water Guidelines.  

"The council is also taking the time to consult closely with the community and explore a range of options including securing an alternative water source that can meet the town’s supply requirements while keeping costs down for ratepayers." 

Dunedoo is also undergoing a $3.4 million upgrade to its water treatment plant, with $2.6 million from the NSW government and the rest from the shire.

“Improving water and wastewater facilities is essential in enabling regional towns to operate and thrive, and ensuring we have safer and more reliable services now and into the future," Warrumbungle mayor Kathryn Rindfleish said.

“I look forward to seeing this water treatment plant project take shape as we inch closer to getting shovels in the ground."