Information released in the Greater Sydney Water Strategy draft plan reveals the region would house a plant providing 90 GL/year and would offer access to currently inaccessible storage in Lake Avon for the Macarthur and Prospect areas.

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Minister for Water, Property and Housing Melinda Pavey would not confirm whether Port Kembla was the area earmarked for the plant, but said she wanted to hear what the community thought about such a facility in the region.

"The region is more vulnerable to drought because it's dependent on one source of supply, and the strategy looks at a range of options to increase resilience during these hard times," she said.

"We want to hear from the community about the potential for a desalination plant. While a number of potential sites have been earmarked, further planning works will be informed by community feedback on the draft. It's one option on the table, but we're looking at all solutions, including how to better connect the Illawarra to water systems in Greater Sydney."

Overall, the strategy sets a guide for water management to 2040 to support population growth, economic growth, and prepare for drought and a changing climate.

"Our water and wastewater systems are operating at their sustainable limits and our current demand for water exceeds our sustainable supply," the report states.

"Compared to other Australian cities, Sydney has a low level of rainfall-independent water supply, making our city vulnerable to rapid onset and prolonged drought."

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The strategy outlines a number of ways to increase Greater Sydney's water supply as well as outlining areas at risk.

The Illawarra was noted as "vulnerable" to drought, while being dependent on one source of supply increases the "vulnerability to asset failure and during times of drought".

Public consultation on the draft strategy will run until November 8, with the release of a final plan early 2022.

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