Outspoken South Australian senator Nick Xenophon and the South Australian Government attacked the deal, which places tight limits on the amount of water that can be bought from NSW for the environment in coming years.

The deal between NSW and the Commonwealth further complicates the Rudd Government's plan to buy $3.1 billion worth of water entitlement to boost river health in the Murray-Darling.

Those involved in yesterday's deal portrayed it as a positive development, because it helped remove a temporary ban on the Commonwealth buying any NSW water.

But in reality, the four-year deal will make buying water from NSW more difficult than it has been for much of the past two years.

Senator Xenophon said the deal was a "dud" that would slow the buyback process.

"This so-called breakthrough agreement on water is a joke," he said. "It's piecemeal, it's window dressing and it's going to be too little too late, with most of the purchases not happening for almost three years."

Recent reform of the struggling river system has focused on removing parochial state interests, and South Australian Water Minister Karlene Maywald said individual deals for states did not help reform.

"The idea was to have one basin, to open it up and not have these bilateral arrangements," she said.

"The Murray can't wait for people to pussyfoot around like this. We've got an environment that is close to collapse."

Ms Maywald said the NSW deal was directly triggered by Victoria's refusal to immediately remove a 4 per cent limit on trading water out of irrigation districts.

Victoria has agreed to phase out the 4 per cent limit over several years, while allowing the Commonwealth to exceed the cap in certain circumstances.

South Australia has threatened to take Victoria to the High Court over the 4 per cent limit, and Ms Maywald said South Australia was seeking further legal advice last night over the NSW deal.

The NSW deal was more popular with farming lobby groups, with support flowing from the Ricegrowers Association of Australia and the NSW Irrigators Council.

Victorian Water Minister Tim Holding declined to comment.