Federal funding for New South Wales has been caught in an ongoing water dispute.

Federal Water Minister David Littleproud has written to NSW Water Minister Melinda Pavey over the state's failure to complete Murray-Darling Basin management plans.

Mr Littleproud says none of the 20 proposed water resource plans have been submitted.

“I am disappointed these plans were not able to be submitted by the end of last year, given the many years over which New South Wales has had to develop these plans,” he wrote.

He is particularly upset because the Federal Government extended the deadline for the submission of water resource plans at the request of NSW.

Water resource plans are used to set the rules for how much water can be taken from the system, including for irrigation.

Over $1 billion in funding for NSW is at risk if, the new April 30 deadline for the 20 plans is missed.

This includes $48 million in federal funding for floodplain harvesting, fishways, metering and riverbank fencing.

“It is not my intention to approve commonwealth expenditure to New South Wales related to the basin plan until there is demonstrated progress on water resource plans,” Mr Littleproud wrote.

Ms Pavey says the ongoing extreme drought is behind the delay, but that water resource plans will be delivered mid-way through the year.

“Our communities need to see these before they are formally submitted as they are integral to their success and a key part of their progression,” she told the Sydney Morning Herald.

Mr Littleproud acknowledged the significant challenges stemming from the drought in his letter.

But he also pointed to Queensland, whish is also in drought but was able to finalise its water resource plans last year.

Victoria, South Australia and the ACT have all submitted their plans too.