THE greatest hurdle to reviving the Snowy River's flows could be removed for little more than $3.3 million.

That's the estimated cost of extinguishing a 56,000-megalitre water debt that must be repaid before the iconic river's flows can be raised above a trickle this spring.

If the debt is not repaid the Snowy River will once again be capped at 4 per cent of its natural flow in 2010-11, almost 10 years after the inter-government deal was struck to rescue the river.

The federal, Victorian and NSW governments have agreed that no more than 38,000 megalitres can be diverted down the Snowy until the debt is repaid, using water savings recovered from the Murray Darling Basin.

East Gippsland Independent Craig Ingram, who put Labor into power on the back of its promise to revive the Snowy's flows, said it was time to extinguish the debt and boost this spring's flows.

He said the Federal Government could walk into the market and buy temporary water at $60 a megalitre to wipe out the Snowy's debt for $3.36 million or divert some of the water it's already been allocated in the basin.

"It's loose change in the scheme of things," Mr Ingram said.

But such a trade-off could be blocked by the Snowy Hydro Corporation if it tried to claim lost power generation against the repayment.

Snowy Hydro water executive David Harris would not comment on what the costs might be.

"These sorts of policy issues are for governments to deal with, not Snowy Hydro," Mr Harris said.

A spokesman for Federal Water Minister Penny Wong said the Government would not buy temporary water as this would be at the expense of its capacity to buy permanent irrigator entitlements, "which provide better long-term value for the environment".

Victorian Water Minister Tim Holding said he was confident the three governments could find a solution on repaying the Mowamba debt, if the NSW Government was "just willing to sit down ... to discuss the options in good faith".

Snowy River Alliance vice-chairwoman Louise Crisp said the river was on life-support and needed water now.

"The Government could make a real difference this year (2010-11) to the Snowy," Ms Crisp said. "The question is, why aren't they doing it?"

Victorian Government figures show wiping out the debt would immediately raise the flow of water down the Snowy for 2010-11 to 62,000 megalitres, with even better flows in 2011-12.

The Snowy Scientific Committee's last report into the river's health states 50,000 megalitres would be "significant in mitigating ecological risks" and "a higher threshold of 63,000 megalitres would be a significant move to re-instating essential flow components" in the river's upper reaches.

Before the construction of the Snowy Hydro Scheme, which diverted the river's flow from East Gippsland to the Murray Darling Basin, more than a million megalitres of water flowed down the Snowy annually.

Under the October 2000 inter-government deal to revive the Snowy River, the governments agreed to boost river's flows to 21 per cent of its natural level within 10 years.

Victorian Farmers Federation water council chairman Richard Anderson said irrigators opposed any government entering the water market.

But he said the Federal Government could easily use water allocated against the 798 million megalitres of irrigator entitlements it has bought in the Murray Darling Basin to repay the Snowy's debt.

But Senator Wong's spokesman said water recovered from the Basin "would be used in Murray Darling Basin catchments, which are also in serious need of additional flows".

Mr Ingram said the Federal and NSW governments were happy to throw water at South Australia before the South Australian election, "so why not do the same for the Snowy?"

In January, NSW and the Federal Governments struck a deal with South Australian Premier Mike Rann to deliver 168,000 megalitres to the Lower Lakes, just two months before the South Australian election.

Mr Ingram said the cost of wiping out the Snowy's debt was insignificant compared with the Federal Government's spending in the MDB.