THE Federal Government has slashed its cut-off price on irrigators' water entitlements by 20-30 per cent under its $90 million first-round southern Murray Darling Basin water tender.

Irrigators and their brokers started receiving offers last week, which showed the Federal Government had dramatically lowered the cut-off price on what it was willing to pay for their water.

The Government has snapped up NSW Murray general security water for prices ranging from $830 a megalitre to $1050, compared to $1320 a megalitre in 2008-09.

The Government even managed to buy Murray River high-reliability water shares at about $2050 a megalitre, compared to an average of $2377 last season.

As reported in The Weekly Times last year, the Federal Department of Environment, Water, Heritage and Arts recruited consultancy Hassall and Associates to quiz water brokers on prices in the lead-up to the latest three rounds of water tenders.

While the Government has refused to reveal the results of the consultancy, brokers said it had learned its withdrawal from the market in the second half of last year had led to a big slump in prices.

One broker said the Government had designed the latest round of three short three-week tenders to maximise the pressure on desperate irrigators to lower their offer prices.

The situation has been exacerbated by the NSW Government's 60,000 megalitre (general security equivalent) cap on the volume of water that can be sold to the Commonwealth.

One broker, who urged his clients to sell their NSW Murray general security water at $800-$900 a megalitre, said there was genuine concern they could miss out if their prices weren't low enough.

Other brokers who urged clients to put in higher offer prices were stunned they missed out.

Cobram water broker Rob Crow said the Federal Government had not offered to buy any of his clients' water.

Irrigators have called on Federal Water Minister Penny Wong to release details of the volumes and values of water it purchased in the first-round tender before the second round starts this month.

A spokeswoman for Senator Wong said details of the January tender would be released ahead of the opening of the next tender.

"Independent market advice provided to the Department indicates that market prices for water entitlements have softened in recent months," the spokeswoman said.