Five hundred remote towns, mostly populated by Indigenous residents, researched over 18 months by the Water Services Association of Australia ((WSAA) require urgent attention "to bring drinking water in line with the Australian Drinking Water Guidelines (ADWG)".

It was also urged more needs to be done than replacing old pipes and plumbing.

The WSAA report, Closing the Water for People and Communities Gap: Improving Water Services to First Nations Remote Communities was released last November and its lead researcher and author, water engineer Eric Vanweydeveld of Aquanex Water Management showed "there is a lot to be done to improve their situations".

"There are a lot of water quality issues across different towns, including in NSW ... it is concerning so we came up with key recommendations after 18 months of research on behalf of WSAA and interviewing more than 170 stakeholders such as state and federal government agencies and community members," Mr Vanweydeveld said.

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In NSW, Mr Vanweydeveld said, the remote communities the WSAA reached out to were in Orana and the far west, and the Riverina and New England regions.

The quality of drinking water was monitored as they recover from previous droughts and experienced floods in recent times.

"The issues are different across different towns and it shows climate change is a big thing for First Nations because it is impacting their water security and quality," he said.

"During the droughts they didn't get enough water and when they got more rain, their quality of water was also impacted by it."

But the situation in NSW pales in comparison to the severity of water quality issues in remote communities in the Northern Territory, South Australia, Central Queensland and Western Australia, Mr Vanweydeveld said, as they found NSW has "much better operational structure" between government agencies, communities and water utilities.

"The remote communities in NSW [facing water quality issues] are much fewer in number than those affected in the NT, WA, SA and remotest parts of Queensland if we focus on Cape York and others where there is a bigger piece of work to be done.

"The [water operational] structure in NSW is quite good compared to others which is quite rare to see that's why we are looking at the NSW model in governance structure ... in the NT for example they don't have a framework, it doesn't exist yet."

Mr Vanweydeveld said NSW has designated water agencies, Aboriginal Land Councils and local councils which have "governance structures" to ensure their remote communities have access to clean drinking water within the health and safety guidelines.

But the "situation on the ground" in remotest parts of NSW needs further "operational improvements" because "it's like a double-edged sword".

The WSAA came up with key recommendations to both federal and state governments to close the gap on water quality for their Indigenous communities.

Mr Vanweydeveld said the WSAA findings are similar to the findings of the Australian National University (ANU) research by Dr Paul Wyrwoll which found 408 remote communities with nearly 650,000 residents are drinking water "not fit for purpose" or outside of the guidelines.

About 177 water utility providers have taken part in the ANU study by Dr Wyroll of the Institute for Water Futures which also found 40 per cent of the locations were remote Indigenous communities not complying with the health guidelines on drinking water for households.

Among the WSAA key recommendations include all states and territories formalise ADWG to ensure minimum quality water standard is met, ongoing funding to build new or improve existing water infrastructure, and the involvement of Indigenous communities in mapping their water needs.

"The time to improve their situations is now," WSAA executive director Adam Lovell said.

"The report shows that dirty and smelly water or taps clogged with calcium deposits cause significant knock on effects for communities beyond drinking water which adds to the urgency of the recommendations.

"The health hardware in housing is equally important, bathing and washing, air conditioning, these are all impacted by poor water quality.

"The Closing the Gap target and United Nations conference on water this year in New York is both an opportunity and a call to urgently improve water quality for First Nations communities."

As the peak body for water utilities across Australia, Mr Lovell said the WSAA urged the federal government to expand the over 10 year old recommendations contained in the National Water Grid guidelines "after many years of inaction".

The federal government has injected at least $150 million over four years to improve the quality of drinking water for remote Indigenous communities.

Mr Lovell said the WSAA has welcomed the funding but the need is urgent for bigger investments as the study showed "dirty and smelly water" has been impacting the health of a huge number of the population in remote areas and it must be prioritised for a change.

Mr Vanweydeveld said they found water agencies and councils in NSW have been implementing programs to improve the water situations for their communities.

It was the reason NSW was not a focus in the study because the remoteness factor in NSW was "different than the other jurisdictions" although their distances to major towns are similar to NT, WA or Queensland.

"NSW [agencies and councils] are trying their hardest with a lot of passionate people but there are some water quality issues not understood by concerned communities," Mr Vanweydeveld said

"We are dealing with extreme weather changes like droughts and floods so the assets have to be re-designed and talked through after 50 years [that they've been built].

"[The assets] need to be adaptable and flexible that requires a lot of planning and integration with different water systems ... the situation is NSW is very challenging."