The five-kilometre pipeline and the doubling of the city's stormwater harvesting capacity were announced on Tuesday with a $5 million funding boost from the state government as part of a drought relief package.

Minister for Water Melinda Pavey visited Orange to announce the funding, which is part of an $88 million government package across regional NSW.

She made the announcement after climbing to the top of the new Department of Primary Industries building in Prince Street to celebrate the completion of construction to the top of the building.

Ms Pavey said she hoped the project could be fast-tracked with work to start "in the next month or so.

"It is part of our emergency legislation so we will be able to get to that work quite quickly," she said.

Ms Pavey said up to two-thirds of water was lost when it was transferred through rivers and creeks.

"If we could put more water in pipelines it is a good investment to extend the life of our water supplies," she said.

"It is funding for a project that will be good for this current drought but is also a major investment in infrastructure in this great city into the future," she said.

Orange mayor Cr Reg Kidd said he hoped the pipeline was completed early next year.

Orange City Council has already begun design work on the project which would involve upgrading the existing pumping station at Spring Creek Dam.

The proposed 375 millimetre diameter pipeline would have the capacity to transfer nine megalitres of water a day.

Cr Kidd said the stormwater harvesting scheme was currently based at the Ploughmans Creek wetlands area.

"This funding will let us build new wetlands on Blackmans Swamp Creek at a site in north Orange alongside the bypass," he said.

"That will increase the amount of water our stormwater harvesting can contribute each year. It will increase our secure yield of water."

It is expected the new wetlands area would hold about 14 megalitres of water.

Preliminary work has begun on this project which would eventually see about 1700 megalitres a year harvested through the scheme.

Council's infrastructure committee chair Cr Jeff Whitton said the pipeline would also enable council staff to bypass Suma Dam when necessary.