NSW water theft probe reveals misconduct

The NSW premier has resisted calls to strip the National Party of the water portfolio and backed existing safeguards against conflicts of interest after an interim report into allegations of water theft in the Murray-Darling Basin.

The report follows an ABC Four Corners program in July that revealed allegations the state's top water bureaucrat Gavin Hanlon - who has now been stood down - helped rort the water system.

The report, released on Monday, found an urgent fix is needed in NSW to repair an "ineffectual" water-compliance and enforcement system with little transparency.

NSW Opposition Leader Luke Foley says the report reveals a "deliberate industrial scale theft of water", to which a "blind eye was turned" by the National Party.

Mr Foley on Monday called on the Nationals to be stripped of the water portfolio and insisted Regional Water Minister and deputy leader of the Nationals, Niall Blair, be removed from his position.

This was backed by the NSW Greens, with spokesman Jeremy Buckingham saying it's a conflict of interest for the Nationals to be in charge of water as the party accepts political donations from irrigators.

Mr Blair wouldn't say whether the Nationals face a moral conflict of interest but admitted water compliance in NSW had been an issue for "decades".

NSW Premier Gladys Berejiklian said the report contained "very confronting but appropriate recommendations" which her government has adopted in principle.

"We'll do everything it takes to make sure public confidence is restored in the process," she said on Tuesday.

She said she had confidence potential issues were being declared at the appropriate time.

"Let's face it, it's important for rural and regional Australia to have a voice in cabinet," she said.

She also backed the parliamentary safeguards designed to prevent members acting on conflicts of interest, including transparency measures.

"Arguably, there is a whole range of conflicts of interest that exist for all members of parliament," she said.

"That's why, as government ministers, we make sure our diaries are published so people can see who we are meeting with and can ask questions about those issues."

The allegations of water theft have been referred to the state's Independent Commission Against Corruption.