Councils are embracing a major Government plan to clean up waterways but warn some local bodies will need help in the face of what may end up being a $5 billion bill.

The Government this week unveiled a policy to create a dedicated national water regulator and new water standards in a bid to improve drinking water quality and keep sewage off beaches.

A Water Services Bill introduced by the end of the year see will water suppliers given five years to adjust to yet-to-be decided standards, with the new watchdog to enforce the rules.

Cabinet papers released with the policy estimate between $309 million and $574 million will need to be spent on upgrading drinking water treatment plants around the country over the next decade.

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But the Government will later this year also consider how stormwater will be included and it's estimated fixing non-compliant wastewater treatment systems could cost $3.0 billion to $4.3 billion, plus operating expenses, in coming years.

Local Government New Zealand has long been calling for a drinking water regulator and says oversight has been neglected.

"The system as it stands is not fit for purpose," LGNZ president Dave Cull says.

"Because it doesn't set a robust standard, councils can actually get out of it, and because the Ministry of Health isn't enforcing it anyway,"

But he says councils over the next decade are also facing a "tsunami" of other programmes, including the Zero Carbon Bill and Three Waters Reform and serious conversation will need to be had about how to pay for it all.

"It's got to be spread, it's got to be managed,so that it's affordable for ratepayers, because in the end it's ratepayers that are paying," he said.

"There will small councils for who there is no way ... There will need to be negotiations about assistance for them."

The Government says it recognises the cost of upgrades to smaller communities, towns, marae and provincial areas could be too much.

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It hopes to have a plan for how to manage this later this year.

Some larger councils could face trouble too, Cull said.

"Some of the big councils already reaching their debt ceilings are going to face some challenges. It's not just equity, it's affordability," he said.

But there was overwhelming demand in communities for clean rivers and water and councils were committed to change, he said.

"The next big thing is getting the regulator in place and getting the regulatory standard set. And then we'll be able to ascertain what it's going to cost," he said.

"But there's no point in throwing up our hands up and saying: 'The sky is falling in. Because we can't afford this we shouldn't'. We all know there needs to be a better standard."

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The Government's drinking water standards will apply to all but those supplying their own water.

About 3.6 million people in New Zealand are estimated to get their water from 1800 larger "networked" suppliers. There's an estimate 336,000 people who self-supply.

The National Party said it supported a water regulator, but had concerns about the burden on councils.

"How much will it cost rural marae and papakāinga, or other small self-suppliers like rugby clubrooms and community halls, to fall in line with the new regulations?," National Local Government spokeswoman Jacqui Dean said.