Menindee locals say they have been asked to sign a waiver stating they will not sue over drinking water issues.

Sheep farmer Rob McBride used to source drinking water from the Darling River near Menindee, but the ongoing drought means he now relies on water delivered by charities, and buying potable water from the local council.

Mr McBride says the Central Darling Shire Council is withholding the delivery of water until he signs a document guaranteeing he will not sue the council or the state government if he or his family become sick.

“It's blackmail and you can't do that,” Mr Mcbride told AAP.

“If you don't sign that paperwork then you don't get any water supplied to your house and your family. We've got a gun to our head.”

Other locals living nearby also say they have been required to sign a waiver before potable water is delivered to their home.

They are concerned that the water may contain traces of blue-green algae blooms, which are present in the Darling River and have been linked to the catastrophic mass fish kills in December and January.

Experts say there is blue-green algae in the town's main water sources, but the Central Darling Shire Council's website says potable water is safe to drink. The council says the NSW health department receives regular samples to ensure it meets Australian guidelines.

Essential Water insists the water is treated and tested.

Macquarie University neuroscientist Gilles Guillemin says some cyanotoxins - produced by blue-green algae - cannot be filtered out.

“I wouldn't drink the water, if I go there [to Menindee], I would drink bottled water,” he told AAP.

Council general manager Greg Hill says residents are asked to sign the waiver because the potable water is delivered “into a tank we have no control over”.

He said many people’s tanks have held raw or untreated water in the past, which means they could be contaminated.

“For this reason council asks that waiver be signed as we have no control over the maintenance and the cleanness of the storage tanks,” he said in a statement.