SOUTH Australian farmers who failed to sell their water to the Federal Government will have their entitlements bought by their State Government.

South Australian Water Minister Karlene Maywald said irrigators had missed out on selling their water to the Federal Government because there was not enough money available to buy it.

The Australian reports the Rann Government will pay market price for up to 11.5 gigalitres of permanent water entitlement but would not reveal how much funding had been set aside for the project.

The water will go to meeting critical human needs during the 2010/2011 summer.

The South Australian move follows revelations up to 400 Murray-Darling basin farmers had applications to sell their water rejected last week – a leaked letter from the Federal Government blamed oversubscription for 2008/2009 applications.

South Australian independent senator Nick Xenophon praised the Rann Government's action but said it illustrated the need for more Federal funding.

"The system is broken and only a national takeover can fix things,'' Senator Xenophon said.