The construction tender for the project was awarded to Hornick Constructions Pty Ltd at last month's Upper Hunter Shire Council meeting and it is expected it will be completed by mid-2021.

Due to the recent prolonged drought, the town has for a long time struggled with water security.

The 40 kilometre Scone to Murrurundi water pipeline opened in May this year, pumping water from Glenbawn Dam. However the latest addition is a further increase in water security should there ever be a failure along the pipeline.

Murrurundi's two existing water reservoirs, which have a combined capacity of 500kL, will be replaced by a new 1,500kL concrete reservoir.

Council have allocated $1,059,000 in grant funding for the new reservoir under the NSW Safe and Secure Water Program. They are also contributing $706,000.

Upper Hunter MP Michael Johnsen said that just because it has recently rained doesn't mean we can take our eye off the ball.

"As ever, we need to plan for the next drought and beyond," Mr Johnsen said.

"I am proud to be a member of a Government that delivered this funding for our local Murrurundi community, as local water security remains a priority for the Nationals in Government in NSW."