MELBOURNE Water has investigated buying water out of NSW this season, according to a senior government source.

The city water corporation "sounded out" some water brokers to determine what options they had, despite the Victorian Government repeatedly declaring it would not buy water to supplement Melbourne's needs.

A spokesman for Melbourne Water denied the corporation had ever examined the option.

However, other water corporations, such as Coliban Water have already purchased seasonal allocation water from NSW Murrumbidgee irrigators to supplement Bendigo's supplies.

Coliban Water is able to buy Murrumbidgee allocations to replace water supplied by Lake Eildon to Robinvale and Sunraysia irrigators.

The water is then freed up in Lake Eildon to supply Bendigo, via the Western Waranga channel.

Melbourne Water has investigated using exactly the same process to supply water to Melbourne via the north-south pipeline.

Until the end of March, NSW State Water processed a record net transfer of 385,580 megalitres from NSW to South Australia and Victorian irrigators and government agencies.