A spokesman for the Victorian Department of Sustainability and Environment said on Monday the project would be referred under the Environmental Protection and Biodiversity Conservation (EPBC) Act, which requires any action which may have significant environmental impact has ministerial approval.

“It is likely to occur sometime before the end of the year,” he said.

The modernization of the Goulburn Murray irrigation district is intended to increase the efficiency of the system from 70pc to 85pc, with a third of the 225 gigalitres forecast savings from the first stage of the project piped to Melbourne in return for $900m State Government and Melbourne Water funding.

Critics of sending the water to Melbourne argue the savings should not be taken out of the catchment when the Murray Darling Basin is so short of water, while some see the loss of water as a small price to pay for a $2.2bn major irrigation upgrade.

Mr Garrett refused to consider the impact of taking the water from the catchment in his environmental assessment of the north south pipe which will carry the savings to Sugarloaf Reservoir.

But he made his approval last week for the north south pipe conditional on it only carrying savings sourced from projects which met EPBC requirements and said he expected to see the Food Bowl project itself referred.

A spokesman for Mr Garrett said the potential impacts of water sourcing would be considered as part of the separate Foodbowl Modernisation project referral.

He said the fact the modernisation work had started was not an issue as current works were not expected to impact on matters of environmental significance.