CANBERRA

- The mighty Murray Darling River Basin, starting to come to life again after a devastating decade of drought, is about to become the centre of an explosive new debate.

A draft management plan to be released today is expected to recommend deep cuts in water allocations, hammering irrigators who say the forecast loss of water will devastate food and other agricultural production.

They will be supported by the federal Opposition, and by other political and industry groups who believe proposed cutbacks leaked to the media yesterday will place environmental demands ahead of economic and farming interests.

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But conservation groups say the cutbacks will be in line with scientific recommendations and should achieve the balance needed to protect the basin's natural resources.

The battle over Australia's most important water system could become a major test for Prime Minister Julia Gillard's fragile minority Government, which holds power only with the support of one Green and three independent MPs.

There is also the possibility that if the major points of conflict are not resolved before the final plan is submitted to the Government next year, the debate could spark new constitutional battles over states' rights.

Although managed by an independent national authority, the states retain control of the basin's river flows within their borders.

Water law expert lawyer Jenni Mattila said the final plan would face its first hurdle in the federal Parliament, where the passage of enabling legislation was not a foregone conclusion.

Mattila said if the legislation was passed, the new law would become a major test of federal-state relations, with the possibility of the states refusing to implement the detail of the plan if they believed it went beyond the limits of the powers agreed to hand to Canberra.

Farmers, mining companies and other water licence-holders could also challenge a state's implementation of the plan in their catchment areas even if the state and federal governments reached agreement.

A new deal is essential.

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The 1 million sq km basin, stretching almost 3400km from Queensland to South Australia, embraces 23 river valleys, generates about 40 per cent of agriculture's contribution to national income, produces more than one half of Australia's grain cereals and most of its oranges and apples, and supports almost one-third of its cattle, 45 per cent of its sheep, and 62 per cent of its pigs.

The basin is also home to two million people, with its water supporting 1.3 million more in towns and cities outside its borders.

But for decades it has been in accelerating decline, hammered by over-use of its water, prolonged drought, natural climate variability and emerging climate change.

The basin authority says a lack of water and an absence of natural flooding have seriously hit such key environmental assets as rivers, streams, wetlands, forests, floodplains and billabongs.

Today's draft plan is designed to provide an integrated approach to managing the basin, limiting water use, identifying risks and providing strategies to cope with them, ensuring water quality and control of salinity, and setting new rules for trading in water.

But leaked details of the draft plan have outraged irrigators.

Reports said the plan proposed slashing supplies to farmers by between 27 and 37 per cent, returning up to an extra 4000 billion litres of water to the basin's waterways.