Water Minister Melinda Pavey said Wollongong, the Blue Mountains and Sydney could fall back to Level One restrictions on March 1, due to the recent intense rains filling the dams in the region.

On Tuesday Cataract Dam was at 72 per cent, Cordeaux at 73 per cent and Avon at 87 per cent.

But Ms Pavey said there was concerns of water quality, as it flowed across bushfire-burnt land and into the dams.

Earlier this month, Sydney's Warragamba Dam was closed after bushfire ash contamination was detected.

"A number of initiatives are in place to ensure the water is safe for use, including extensive testing, filtration and nets to catch debris, but we are allowing an extra two weeks purely as a precautionary measure," Ms Pavey said.

"It will also give the system time to recover and on March 1 we expect Greater Sydney will revert back to Level 1 water restrictions, subject to water quality assessment by Water NSW and Sydney Water."

It remains unclear whether plans for a possible desalination plant for the Illawarra is still on the cards.

READ MORE: Electricity prices could rise after bushfires

Earlier this month, Ms Pavey floated the possibility of a desalination plant for the Illawarra - but only if the present drought and rainfall conditions persisted.

The minister's office was asked about the future of the plant but did not respond by deadline.

Under the restrictions, the use of water has dropped from 200 litres a day in 2017 to 180 litres today.

Under Level 1 water restrictions, hoses cannot be left running unattended, and vehicles can only be washed with a hose if it is fitted with a trigger nozzle.

Standard sprinklers and watering systems cannot be used at any time.

Fines will still apply for those committing breaches of water restrictions - standing at $220 for residential breaches and $550 for businesses.

Exemptions will be available for non-residential customers with outdoor water use as their core business.