CMA chief executive Bill O’Kane said Melbourne Water would have to demonstrate it could take water without any negative impact on the river to be granted an extraction licence.

“If they can’t demonstrate that, it won’t happen,” he said.

The State Government is planning the 70-km pipe connecting the Goulburn River and Melbourne’s Sugarloaf Reservoir to take delivery of its one third share of the 225GL a year anticipated savings from the $1bn first stage upgrade of the Goulburn Murray irrigation district.

The Government has pledged $600m to the project and a further $300m from Melbourne Water in return for 75GL a year to help shore up Melbourne’s water security.

To deliver the full 75GL, the pipe capacity of 300ML-day would require the water authority to take water on around 250 of the 273 days of the traditional irrigation season.

Melbourne Water had claimed the extraction would be only 3-6pc of irrigation season flows of 5000-10,000ML/day and would lead to at most a five centimetre drop in the river, with negligible environmental impact.

But Anti pipe campaigners Plug the Pipe have pointed out that flows had only been above 5000ML/day for around a quarter of the last three irrigation seasons and that there had been days during the shoulder season when the pipeline’s daily capacity of 300 megalitres a day was equivalent to the entire river flow.

But Mr O’Kane said it was wrong to suggest the pipe would take 100pc of flows as this would never be allowed to happen.

He said like any other diverter Melbourne Water would have to order water and it would be released from Eildon on top of the existing river flow.

“It will be harder to extract 300ML from 300-500ML/day flows than from 5,000ML/day,” he said. “But there are higher flows in the winter and spring.”

Mr O’Kane said the CMA had licensing responsibility and factors it would be looking for were, among others, impact on flows and fish..

He said there were already river users taking similar volumes without negative impact.