Mr Madden endorsed a final route broadly in line with the one put forward by Melbourne Water, but put in place a number of conditions including a bond as security that any environmental damage caused by pipeline construction is made good.

The 70-kilometre pipeline is intended to transfer the State Government’s one-third share of savings from the first stage of the food bowl modernisation project to Melbourne in return for $900m towards the project.

But it has attracted widespread opposition from rural communities facing their lowest irrigation allocations on record who argue the Government has reneged on promises not to take water over the divide for Melbourne and that there is not enough water in the catchment for those dependant on it, let alone Melbourne.

Rural water authority Goulburn Murray Water is today expected to tell irrigators to expect their worst year ever, with up to 30pc of channels forecast not to operate and pulsing and carting required to delivery essential water and minimise losses.

Mr Madden said the Sugarloaf Pipeline project was an integral part of the Brumby Government’s plan to secure water supplies for the State. He said determination of the final pipeline route would allow Melbourne Water to complete important planning work to prepare for construction, but construction work itself could not begin until the project had received Commonwealth Government clearance.

The project has been referred to Federal Environment Minister Peter Garrett to determine whether its environmental impacts breach the Environment Protection and Biodiversity Conversation Act 1999.

“The Commonwealth Govern-ment must make a decision on those matters of national environmental significance... before construction can begin,” he said.