The federal Water Minister has cut funding for a program that paid farmers to save water for the Murray-Darling Basin. 

Water Minister Keith Pitt says no more water will be taken from farms to be returned to the environment, after he axed the Water Efficiency Program (WEP). 

The program paid for improvements such as the lining of irrigation channels and other upgrades to water infrastructure on farms.

But Mr Pitt has declared the scheme a failure. He says the government will instead allocate $1.3 billion from the Water for the Environment Special Account to fund off-farm water efficiency upgrades.

There is no word on what off-farm projects the government may decide to fund. The government has only said that it will set aside $1.3 billion “for state-led projects, as well as $150 million in direct grants”.

“This is a significant change in terms of a pivot on policy,” the minister said.

“I am terminating the WEP. It hasn't delivered what it was supposed to or what was expected.”

SA Senator Rex Patrick - a vocal critic of The Nationals' handling of the water portfolio - says farmers should be allowed to sell their water back to the government if they want.

“The most efficient way for taxpayers to recover water for the rivers is buybacks from willing sellers,” Senator Patrick said.

“The Water Act makes it very clear that the only consideration, in relation to the execution of the Murray-Darling Basin Plan, is in the environment.”

Mr Pitt maintains says no more water should be removed from agriculture.

“As a former farmer I get it. This is what absolutely affects your profitability, your confidence in terms of investment. I think this is a good shift in terms of policy,” he said.

Around $60 million will remain in the WEP scheme for projects that have already been committed.

The Federal Government claims it will still be able to deliver 450 gigalitres of water saving for the environment by 2024.

Mr Pitt has now been called on to outline how the government will meet the Murray Darling Basin Plan.