Northern Tablelands MP Adam Marshall has sent an urgent written request to Minister for Water Melinda Pavey on behalf of Uralla and Bundarra communities.
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Uralla Shire Council has predicted both townships will run out of water before the end of June this year as water storage levels drop each day.
Mr Marshall asked for $50,000 in funding to assist efforts in extending the life of both Uralla and Bundarra's town water supply.
"With Uralla's Kentucky Creek Dam at 31 percent and Taylors Pond at Bundarra at 32 percent immediate action is needed to ensure the community has access to potable water," Mr Marshall said.
Uralla Shire Council wrote to Mr Marshall advising him of the dire situation and included a strategy developed to manage the ongoing water shortage.
Mr Marshall said neither he nor the State Government would let any town in regional NSW run dry.
"This includes upgrades to existing water infrastructure, improved water monitoring technology and increased communication with the community in relation to its water usage.
"Council still needs to investigate what specific infrastructure can be built quickly and will have the biggest impact in terms of ongoing water supply.
"I have asked Minister Pavey to provide an emergency $50,000 grant, as a matter of urgency, so Council has as much time as possible to get water saving measures in place in a bid to prolong day zero."
Mr Marshall said in the long-term Uralla needed to consider alternate water sources. Recent efforts to find a bore to supplement the town's supply has not been successful.
"Uralla is a vibrant community and every step needs to be taken to ensure local businesses and industries have the water security they need to continue operating in the town.
"I am going to continue to work with Council to ensure it has the ability to continue test drilling in the hope potable water may be found. I'm also pleased to hear Council is considering the use of recycled water for potable use, which if implemented would take considerable pressure off the Kentucky Creek storage.
"This is something I am a very keen supporter of and hope Council takes this opportunity to become one of the first country communities in NSW to introduce recycled potable water," he said.
