NHILL residents may still have to wait another year before safe drinking water flows from their taps.

A $13 million contract has been awarded to construct a 38km pipeline from the Dimboola Water Treatment Plant.

Mitchell Water Australia will start immediately, with the major construction process set to start early next year.

With a population of more than 2000, Nhill is the largest town in Victoria to not have a treated water supply.

Since its settlement, locals have been forced to take their water from brackish bores which often produce discoloured water.

Most of their drinking and bathing water comes from rainwater tanks.

The Dimboola plant will first need to be upgraded and construction of new storage tanks in both Nhill and Dimboola have already started.