However, it appears the plant may end up somewhere in Port Kembla.

Discussion around a desalination plant - which turns sea water into drinking water - started in January this year as a response to the ongoing drought.

READ MORE: How many COVID-19 cases are in your suburb?

The heavy rainfall in February that filled up the region's dams did not take the plant off the agenda, with the government looking for suitable sites.

A spokesman for the state-owned WaterNSW, which is managing the early stages of planning for the facility, said it had been working on site location.

"A preferred site for the proposed Illawarra desalination plant has been identified and investigations into the site's suitability are continuing," the spokesman said.

"The location is yet to be formally confirmed, pending the completion of those investigations."

In NSW parliament budget estimates in March, WaterNSW CEO David Harris said the body had identified a "disused industrial site" which would be suitable for the plant.

Mr Harris did not further specify the location.

However, in response to supplementary questions lodged by budget estimates committee members, Water Minister Melinda Pavey suggested Port Kembla could be the location.

"WaterNSW is currently investigating the feasibility of a number of industrial sites in Port Kembla," Ms Pavey said.

The minister said the next stage in the process will occur in the second half of 2020, when WaterNSW will submit a strategic business case to government, as well as an environmental impact statement.

WaterNSW was also expected to launch community consultation about the Illawarra desalination plant "in the coming months".

Ms Pavey has previously said the planning for the project did not commit the government to building an Illawarra desalination plant.

She said the plans meant the government was "ready to act immediately" if dam levels fell.