Shoalhaven City Council is foreshadowing water restrictions for mid-September, despite dam capacity currently at 87 per cent.
The last significant rainfall occurred in June, resulting in water flow in the Shoalhaven River to drop below 90 megalitres a day.
Acting Director of Shoalhaven Water Robert Horner said the forecast for short-term rainfall was grim.
"The total combined Shoalhaven dam storage level is at 85 per cent of capacity and the outlook for rain in the near future is not strong," Mr Horner said.
"We are therefore preparing for water restrictions from mid-September on the basis that we receive no significant rainfall beforehand.
"The Shoalhaven River, through releases from Tallowa Dam, is the city's main normal water source and pumping has ceased from the river at this time and the forecast is signalling further dry conditions".
Water restrictions are enacted when dam capacity drops below 60 per cent and is when water will be released from backup storage at Danjera dam.
In May, Shoalhaven Water also warned the area may face water restrictions due to lower than average rainfall.
The last time water restrictions were in force in the Shoalhaven was in December 2018, despite other areas in NSW experiencing drought since then.
For more information on current and upcoming water restrictions, you can contact Shoalhaven Water on 1300 622 246.