Last night, Councillors moved Urgent Business Without Notice to lift water restrictions from communities upstream of Windamere Dam.

Speaking to his motion, Cr Peter Shelley explained Rylstone Dam, which services Rylstone and Kandos townships, was currently at 100 per cent capacity.

"We are one shire, but we certainly have different water supplies, so there's no reason for Kandos and Rylstone to be on water restrictions," he said.

"Unfortunately Mudgee still has to retain water restrictions until levels rise in Windamere."

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Effective immediately the townships and villages of Rylstone, Kandos, Charbon and Clandulla will no longer be on water restrictions.

Mudgee and Gulgong will remain on Level 2 water restrictions. These townships are serviced by Windamere Dam which is currently sitting at 29.8 per cent capacity.

Cr Russell Holden added it would be "prudent" for Mudgee and Gulgong to continue on restrictions until such a time that their water source is better replenished.

"We need to be vigilant about the water supply in Windamere and we need to make sure that even though we've had a good spring so far, it's not been unknown to have one good spring and summer then go straight back into drought," he said.

"So we need to make sure that we're onto State Water and ensure that we have another look at our water sharing plan with Burrendong Dam and the people below there. And maintain our vigilance in ensuring that this community has water forever and a day.

"I support the fact that Rylstone Dam is at 100 per cent and that there is no need for restrictions at this point in time, however I think it would be prudent for the Mudgee community and Gulgong community to remain on the current levels."