A recommendation councillors endorse the plan initially involving an application for federal government drought assistance funding has been tabled for consideration on Tuesday.

If the funding bid is successful, the council will instigate further bids to access 800 megalitres of water from the Colombo Creek system and use the existing Riverina Water County Council-owned pipeline and pump connecting the Urana water treatment plant and Colombo Creek.

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The present water supply for the man made lake is via the unregulated Billabong Creek system where council has a license to pump once the creek reaches a certain level.

But in dry periods such as the last two years and the millennium drought, the lake dries up and has a negative impact on the Urana township economy.

One example is the council-owned caravan park which suffered an almost 46 per cent drop in gross income last financial year compared to 2016-17 when the water levels were high.

Urana's cafe, supermarket, pub and bowling club are also negatively impacted when water levels are low.

Lake water is also used for the town's caravan park and swimming pool, tree plantations and the Billabong Crows Football-Netball Club homeground, Victoria Park.

"The aquatic centre not only provides significant social and economic benefits to the region when full, but also provides a water supply for council to water numerous other areas and facilities in the area with untreated water, instead of having to pay for treated RWCC water," Federation general manager Adrian Butler said.

The estimated costs would be around the $400,000 mark.

The Urana Aquatic Centre development is a priority of the merged council area with $934,940 committed this financial year and another funding pledge of $434,469 from the state government late last year.