The federal government will allocate $1.5 billion in new funding to ensure Australian cities have secure water supplies, says Climate Change and Water Minister Penny Wong.

She has also announced the government will set aside $3 billion to buy back water from irrigators in the Murray-Darling Basin.

The government will allocate $1.5 billion for urban centres to secure alternative water supplies as part of its $12.9 billion spending on water over the next decade, Ms Wong said in Sydney.

The announcement of a revamped water plan and a new body to oversee it follows a deal with the states giving the commonwealth control over the Murray-Darling Basin - a massive region spanning from Queensland to South Australia.

Ms Wong said more details of the $12.9 billion plan would be announced in the May budget.

"I can broadly tell you what it comprises - it is a $10 billion plan which was associated with the COAG (Council of Australian Governments) agreement... just over $3 billion for purchasing (water), $5.8 billion for investment and infrastructure and a range of other measures associated with water accounting and other matters," she told reporters.

"There is new money, $1.5 billion focused on urban water.

"First there's the urban desalination plan of $1 billion which is focused on cities above 50,000 (people) to secure alternative water supplies in the face of reduced rainfall due to climate change.

"This is about ensuring Australians in cities have secure water supplies into the future.

"Then there are two programs, $250 million each, one a national rainwater and grey water plan which aims to encourage and build on the responsible behaviour Australians have already shown in their recycling, in their use of grey water and trapping rainwater."

She said the money would be in addition to that from other water initiatives.

Plan welcomed

NSW rice farmer Laurie Arthur, who heads up the National Farmers Federation's water taskforce, has welcomed the minister's announcement.

"It's very much in line with existing policy of the previous government, so I think we'll get to a good negotiated outcome with the government.

"I think they're very focused on rural improvement, so I think we'll find a way forward."

Replumbing funding 'might disappear in buyback'

Meanwhile, the federal opposition says money previously allocated for "replumbing" rural Australia may now disappear into buying back water licences.

"We are pleased that they've obviously kept the plan and pleased that they're involved in the buyback," he told ABC Radio.

"But the buyback was predicated on something critical and that was that there was funding for farmers to basically replumb rural Australia, to help gain the water efficiencies that were necessary, whether it's from irrigation, from pipes, from covering channels.

"There is a very real indication that almost $2 billion of the money that was going to go to farmers may now disappear and be used for other things."

Mr Hunt says the buyback will not be effective unless there is assistance to replumb farms.

"We need a guarantee that the farmers aren't about to have their water futures taken from them," he said.