The suspension will allow Sydney to pipe more water from the dam immediately. The Sydney Metropolitan Water Plan allowed limited transfers once Sydney dam levels fell below 75 per cent and could only transfer one metre of water from Tallowa Dam.

The now-suspended agreement only allowed more water to be pumped during "an extreme drought". An extreme drought under the water plan is when Sydney's water capacity drops below 30 per cent.

Sydney's water supply sits around 50 per cent.

What has the NSW government done so far?

Water Minister Melinda Pavey passed a bill in NSW Parliament to suspend a section of the Water Sharing Plan for the Greater Metropolitan Region Unregulated River Water Sources 2011, which outlined the transfer rules for water from Tallowa Dam to Sydney's Nepean and Warragamba dams.

Now the transfer agreement is suspended, three meters of water below the full level of Tallowa Dam can be taken even though Sydney is not in extreme drought.

The suspension of transfer rules will remain in place until June 30, 2020 unless it is revoked sooner.

Why have they revoked the transfer rules?

Essentially to shore up Sydney's water supply if dry weather conditions continue.

A spokesperson for Water Minister Melinda Pavey said the state was in the midst of "the worst drought on record" and the government acted to bolster supplies to Sydney.

"Water storages are depleting faster than was previously forecast which is why the transfers began at 50 per cent rather than 30 per cent," a spokesperson said.

"There will be no changes or impact to environmental flows."

Sydney is currently on level one water restrictions and Independent MP Justin Field said the decision was made as it was politically easier than increasing water restrictions on Sydneysiders.

"It's clear that the NSW Government would rather transfer more water from the Shoalhaven than tighten water restrictions on the city," Mr Field said.

"Sydney has a poor track record of water efficiency and recycling and the Shoalhaven is paying for poor water management.

"The Water Minister has to explain why additional transfers have been allowed early and how the needs of the Shoalhaven community and river are going to be ensured.

"Downstream water users and in particular the oyster industry rely on regular freshwater flows to ensure a healthy river."

What does Shoalhaven's water supply look like?

Acting director of Shoalhaven Water Robert Horner recently said three years of supply remained in Tallowa Dam for Shoalhaven usage.

Just in August, Shoalhaven City Council foreshadowed water restrictions were expected to be in place by mid-September.

During August total dam capacity in the Shoalhaven was around 87 per cent and as of September 4, Tallowa Dam was at 62 per cent capacity.

The last significant rainfall occurred in June, resulting in water flow in the Shoalhaven River to drop below 90 megalitres a day.

Shoalhaven Water's Robert Horner said the forecast for short-term rainfall was grim.

"The Shoalhaven River, through releases from Tallowa Dam, is the city's main normal water source and pumping has ceased from the river at this time and the forecast is signalling further dry conditions" Mr Horner said.

Water restrictions are enacted when dam capacity drops below 60 per cent and is when water will be released from backup storage at Danjera Dam.

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