The Federal Government’s says its new billion-dollar dam package for NSW will see “bulldozers in the ground” next year.

Prime Minister Scott Morrison and NSW Premier Gladys Berejiklian have announced a joint investment between the federal and state governments for “priority large-scale water infrastructure projects”.

It includes up to $650 million to upgrade the Wyangala Dam, including raising the dam wall by 10 metres.

Up to $480 million will go to the construction of the new Dungowan Dam -  first new dam in NSW for more than 30 years.

“These projects don't happen overnight but we're working as quickly as possible to get all the necessary work done so we can start digging,” Mr Morrison said.

 The NSW Government says it hopes the works will be completed by 2025.

“What was missing in the past, was the funds to accelerate the project,” Ms Berejiklian said.

“For too long it's been talked [about] ... it's not just the funding, it's the political will and when you get a Federal Government backing what you're doing, that gives us the impetus and the momentum to keep pushing forward.”

The NSW Opposition says more immediate solutions are needed, such as new pipelines and bore drilling.

“Talk of dams from this government after eight-and-a-half years of not doing anything is a convenient distraction,” NSW shadow minister for water Clayton Barr said.

“If you are west of the divide in NSW at the moment your concern isn't about a dam, your concern is about water today and tomorrow.”

NSW Planning Minister Rob Stokes is taking charge of dam applications, fast-tracking development by declaring them critical, “state-significant” infrastructure.

Mr Stokes says he will sign off on applications personally, bypassing the Independent Planning Commission.

The Nature Conservation Council is worried that the usual checks and balances around these dam projects will be ignored.

“Bypassing biodiversity assessments is only going to make the problem worse,” the council’s head Chris Gambian told the ABC.

“It means that you could build a piece of water infrastructure without paying any attention to what that means for the health of the river.”