MELBOURNE'S major catchments received 218 billion litres less water last year than the long-term average, while water use continues to be 37 per cent lower compared to the mid 1990s.

Premier John Brumby and Water Minister Tim Holding released the figures while inspecting a $100 million connection from the Tarago Reservoir to Melbourne.

Mr Holding said rainfall over Melbourne’s major water catchments was 928 millimetres during the past year or 14 per cent below the long-term average.

Melbourne's water storages are 34.8 per cent full, holding 617 billion litres.

At the same time last year storages were 38.8 per cent full, holding 688 billion litres – a shortfall of 71 billion litres on 2008.

He said Melbourne’s total water consumption remained steady for 2008 at 368 billion litres despite a growing population.

Mr Brumby said the Victorian Government was increasing Melbourne’s water supplies by 240 billion litres – or more than half of the city's current water use - by building Australia’s largest desalination plant, funding irrigation upgrades and re-connecting the Tarago reservoir.

The Tarago Reservoir was disconnected in 1994 due to poor water quality.

A state-of-the-art treatment plant is under construction including a 20 million litre storage tank to ensure a high quality water supply from the Reservoir. 

Mr Brumby said the disappointing inflows in 2008, which were 43 per cent less than the long-term average, highlight the need for diversifying Melbourne’s water sources.

“All of our projects are well underway with more than 4km of pipes already laid on the Sugarloaf Pipeline, a seawater sampling unit installed as part of the desalination project and testing started for the recycled water upgrade at the Eastern Treatment Plant.”