Joint funding has been announced by the Gillard and Keneally Governments to fast-track construction on a $43.33 million augmentation and complete safety upgrade of Chaffey Dam.

The project will increase the capacity of Chaffey Dam from 62GL to 100GL and improve the dam's safety so it can withstand a Probable Maximum Flood, the highest rating set by the NSW Dams Safety Committee.

The Federal Government has committed $17 million, the NSW Government has provided $6.6 million, while Tamworth Regional Council and local water users will contribute $3.3 million.

NSW State Water will immediately begin work on the necessary environmental assessment and planning studies so that construction can start in 2012.

The augmentation and safety upgrade of Chaffey Dam is part of the NSW Government's $250 million dam safety upgrade program being undertaken by State Water.

This follows on from the Keneally Government's completed work at Blowering Dam, while construction continues at Chaffey Dam, Burrendong Dam, Keepit Dam and Wyangala Dam.

NSW Minister for Water, Phil Costa, said he will also be writing to Tamworth Regional Council and local water users confirming the cost sharing agreements agreed by the Community Reference Panel Augmentation Sub-Committee in 2007.