The people of Yass - a rural town just 60km from the nation's capital - have avoided drinking their foul tap water for decades.
Local artist Al Phemister has lived in the NSW Southern Tablelands town for 30 years, with his family relying on a rainwater tank to avoid the sometimes brown and smelly town supply.
"It's not pleasant to drink," Mr Phemister told AAP.
"Even if you boil it in a jug - they say that makes it better - you can still taste it in your cup of tea or coffee."
The federal and NSW governments on Thursday announced funding of $18 million each to build a new treatment plant and refurbish existing infrastructure to improve the quality of potable water.
"All Australians, no matter where they live, have the right to safe, reliable water," federal Water Minister Tanya Plibersek said in a statement.
"Yass is only an hour drive from Canberra yet residents experience regular boil water alerts due to water quality issues.
"This isn't acceptable and that's why we are taking action."
The town water is affected by dissolved solids and high organic matter from the Yass River, which is difficult for the ageing infrastructure to process, according to the council.
Mayor Jasmin Jones said the project was a boon for the fast-growing town, which had ambitions of adding 10,000 people to its population by 2036.
"Confidence in our water for both our existing residents and future residents is vitally important," Ms Jones told AAP.
"It impacts everything: how your local businesses perform, how many residents are accessing local education and health services.
"The flow-on effect ... is it amplifies all the possibilities for Yass."
Yass was dealing with the possibility of a boil water notice as recently as Monday, after heavy rain across the region.
Health authorities had been alerted there was four hours of safe drinking water left, before council staff were able to rectify the issue.
The new water plant will be equipped with fluoride dosing, settling plates and UV filters and should be completed by 2028.
The government money will save ratepayers from funding the works, at roughly $300 each year for the next two decades.
"This is the missing piece in the funding puzzle," Ms Jones said.
"Families can expect to turn on the taps with full confidence and businesses can hopefully flourish."
Funding was also provided for long-term water security in Cobar, in outback NSW, and future-proofing supplies in Bathurst, in the central west.
