Minister for Environment and Water Tanya Plibersek has announced "more time and more options" for claiming back 450 gigalitres of water for the environment under the Murray Darling Basin Plan - and that includes government buybacks.
Ms Plibersek said it was clear that the settings in the plan "as they exist at the moment" made it impossible for the plan to be delivered on time: only 2GL of the 450GL target have been delivered in 11 years.
She said the government would be seeking voluntary water purchases towards the target as well as extending the time frame for other ways to save the water.
"So what I'm proposing for that 450 gigalitres is that instead of relying on some mythical projects that haven't eventuated until now, and are unlikely to eventuate in the future, we'll also be open to water purchase in this area," Ms Plibersek said.
"When I asked the Murray-Darling Basin Authority recently for advice on whether the plan could be delivered on time, I was confirmed in my worst fears that, in fact, the plan wouldn't be delivered on time and that we needed to find a new way forward with the Basin states.
"Today I'm very pleased to announce that after many months of negotiations with the Basin states and territory, we have struck an historic agreement for a way forward.
"This way forward will deliver on the whole of the Murray-Darling Basin Plan, including the 450 gigalitres of additional water for the environment."
Water infrastructure projects, supply and constraint projects, will be given until 2026 for delivery rather than 2024 and the timeframe for the 450GL target extended to 2027.
"And importantly, instead of relying only on infrastructure projects for that 450 gigalitres, we'll be seeking voluntary water purchase towards that target as well," Ms Plibersek said.
The Minister did confirm all options are on the table - and that the government has 130 submissions on ways to achieve the target to consider.
"I think it's also important to say that just recently we engaged in an extensive consultation with basin communities about the best common sense way to deliver on this 450 gigalitre target," Ms Plibersek said.
"And we actually got some terrific ideas about the best way forward including, of course, being able to purchase water towards the target, but looking at other infrastructure projects as well, looking at water use rules, and we're very open to all of those suggestions.
"I have consistently said that all options are on the table as far as I'm concerned. What I'm looking for are more options here, not fewer options."
She refused to say how much of the target would be achieved through buybacks.
"Wherever we can reduce the need for water purchase by using infrastructure or other methodologies, of course, we will do that," Ms Plibersek said.
"I also want to be quite careful about what I say about our water purchase program because as soon as the Government is in the market for water, there is the risk that water markets might be distorted."
The government will begin the legislative work of removing the cap of 1500 gigalitres of water that can be purchased and making sure that the water for the environment special account can be used to do voluntary water purchases.
"We also will be introducing measures to make sure that our water markets are better run and better protected," Ms Plibersek said.
"There's been a lot of good work done to make sure that we get the cowboys out of the water markets to make sure there's more transparency, more accountability, and fewer cowboys."
Federal Member for Riverina Michael McCormack moved a disallowance motion against the plan in the Federal Parliament in December 2012 and says now the new deal brokered will be "disastrous".
"My actions more than a decade ago led to the Coalition adopting the policy of no buybacks," Mr McCormack said.
"It was not easy at the time but it was the right thing to do.
"Water politics is difficult, I appreciate that, but you cannot enact policies which remove productive water from food-growing areas and reduce the economic production of those vibrant places.
"If you do that, it leaves stranded assets, fewer farmers and hurts everyone in the community."