EXCLUSIVE: ALL new stock and domestic dams built on properties of 8ha or less will have to be registered under sweeping Victorian Government reforms to be released today.

The move has been prompted by fears the uncontrolled construction of stock and domestic dams is posing a risk to towns', irrigators' and the environment's share of dwindling supplies in some catchments.

A Department of Sustainability and Environment spokesman said a small registration fee would apply to all new or altered dams next year.

At this stage there are no limits on how many dams could be built.

The statewide policy will be released by Water Minister Tim Holding today as part of the Government's Northern Region Sustainable Water Strategy.

The strategy says the Minister for Water will issue "technical guidelines" to calculate the "maximum volume of reasonable domestic and stock (water) use to ensure consistency and fairness".

The guidelines will ultimately determine if a landholder must obtain a licence to take and use water under the Water Act.

In the Campaspe catchment, small stock and domestic dams have been capturing 29 per cent of the scarce rainfall run-off in recent times.

"Rapid growth in the number of stock and domestic dams has occurred as a result of the increased numbers of lifestyle farms," the report states.

The strategy also outlines plans to cut thousands of irrigators' water allocations by 20 per cent and divert the water into a drought reserve to ensure delivery of the following season's carryover, stock and domestic supplies.

The System Reserve Policy comes into affect from July next year for more than 11,000 Goulburn irrigators and 12 months later for 10,000 Murray irrigators as part of the Government's reforms.

The Government has admitted the reserve policy will cause some initial pain to irrigators in the first season, but argued it would eliminate the risk of starting the following season without water.

Under current rules, irrigators must wait until enough water has accumulated each season to cover water delivery losses before an allocation can be made.

Under the new reserve policy, Goulburn irrigators will get unrestricted access to the first 30 per cent of their allocations made against their high reliability water shares in 2010-11.

But half of any water allocated above 30 per cent will be diverted to cover the 2011-12 season's delivery losses.

Once irrigators' allocations have reached 50 per cent, no more water is diverted to the reserve, and irrigators gain the benefits of all additional storage inflows.

The same process will apply to Murray irrigators, but will be delayed by 12 months while the Victorian Government seeks federal and interstate government guarantees the water will remain in Victorian irrigators' hands, and not be snapped up as part of any drought contingency plan.

DSE modelling of the new policy shows it would slash the number of years in which the August 15 allocation is zero, from 16 years in 100 to none under the worst case scenario.

Victorian Farmers Federation water council chairman Richard Anderson said it was going to be pretty tough in the first year as irrigators had to sacrifice allocation to build up the reserve.

But he said it would ensure carryover and stock and domestic water could be delivered in the following season.

"The pressure comes on if you're reserving enough water to cover a full season's losses, when you've only got enough to deliver a low allocation," Mr Anderson said.

"The pressure would be to allocate the reserve water in those tough dry years. I think you might need to have some form of irrigator consultation on whether the reserve is allocated or held to cover losses for the whole season."

The Government is also preparing to expand the current carryover rules, which have led to Sunraysia irrigators losing some of the water they carried over from 2008-09 into this season.

Under current rules, irrigators can only carry up to 50 per cent of the volume of their high and low-reliability water shares into the next season.

A further limit is placed on the volume available to irrigators in the following season equal to 100 per cent of their entitlement.

Many Sunraysia irrigators have breached the 100 per cent rule this season, given they carried over the maximum 50 per cent allocation from last year and have gained an allocation of 57 per cent on the Murray this season.

So far they have lost 7 per cent of their carryover water (50 + 57 = 107, when the limit is 100 per cent).

Under the new rules, the Government intends to give irrigators access to a spillable water account next season, into which they can divert carryover water that would otherwise be lost due to the 100 per cent rule.