The state government is betting more heavy rain will fall in coming months to justify its decision to ease water restrictions in Sydney and the Lower Hunter.
In a surprise announcement, Water Minister Melinda Pavey said on Tuesday that the current Level 2 restrictions would be wound back to Level 1 from next Monday.
"I have taken advice from Hunter Water. We are in a firm situation, this dam (Grahamstown) is nearly at 60 per cent," she said.
"We expect that when all of the inflows come in we might get around 65 per cent. There are some good weather patterns developing."
Combined Lower Hunter water storages were at 62 per cent on Tuesday - a 9.2 per cent increase in the past fortnight.
Grahamstown Dam, the region's main water source, was 59 per cent full, Chichester Dam was 100 per cent full, Tomago sandbeds 65 per cent and the Anna Bay sandbeds 56 per cent.
"Although this is a positive step in our drought recovery, we are not out of the woods yet, which is why it's really important that we all continue to use water wisely and save it where we can," Ms Pavey said.
She would not commit to further reducing restrictions if combined storage levels reached 70 per cent.
"I would have to take advice from Hunter Water and have a look at those trigger points in the Hunter water plan," Ms Pavey said.
Hunter residents and businesses have reduced their water usage by 20 per cent since restrictions were introduced for the first time in 20 years last August.
The head of the state's water sector Jim Bentley told the Hunter Business Chamber last Friday that the water savings achieved as a result of water restrictions needed to become the new normal.
While acknowledging restrictions had the potential to have adverse social and economic impacts, Dr Bentley said helping individuals and businesses improve their water efficiency was fundamental to improved long-term water security.
"We are still using 15 per cent more than Melbourne. So we have to ask ourselves are the savings we have made just wastage that we should have been dealing with some time ago or have we gone to far?," Dr Bentley said.
"People tell me there are differences between Sydney and Melbourne and of course there are but we need to understand what the right level should be and not just accept it is what it is."
Level 1 water restrictions permit outdoor watering before 10am and after 4pm with trigger nozzle hose and washing of vehicles with a bucket, trigger nozzle hose or pressure cleaner.
Restrictions on sprinkler use and hosing hard surfaces remain in place.
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