The combined capacity of Orange's supply dams is now 35.54 per cent. That is the highest in 12 months.

If the levels continue to rise at the current rate it will reach 40 per cent within weeks, which is the point where Level 4 restrictions would replace the current tight Level 5 rules.

Orange City Council has already voted to move to Level 4 if the capacity hits 40 per cent.

Orange has been on Level 5 restrictions for the past 10 months.

Under Level 4 people can wash their cars at home from 9am-noon any day, have five minute showers, use soaker hoses, top up pools during designated morning and night slots, fill children's pools and water their gardens twice a week.

Orange residents are being frugal with water use. Last week the average use was 127 litres per person per day, well below the Level 5 target of 160.

Orange's supply has been boosted by flows from the Macquarie River and good rainfall.

The Bureau of Meteorology said so far this winter 171 millimetres of rain have fallen in Orange.

Good rain has led to both Lake Canobolas and Gosling Creek dams filling up.

Spring Creek Dam is 64 per cent full and Suma Park Dam is 27 per cent full.

Mayor Reg Kidd said it was a "fantastic milestone" for the city.

"I want to emphasise, we're not out of the woods yet, but we are certainly turning a corner in terms of looking to relax a few of the restrictions we have in place," he said.

"We could hit 40 per cent in a matter of weeks, depending on the weather."

In the past three weeks storage has increased by 6.69 per cent.

"We're also pumping from our storm water harvesting systems and there is inflow into Suma Park Dam of over 30 megalitres per day," Cr Kidd said.

"If we get to 40 per cent then we will have a little breathing room over the summer months."

And he said there might be even brighter news on the horizon.

"If we continue to work together to use every drop of water responsibly we can realistically start to look at paring restrictions back to level three if we reach 50 per cent capacity," he said.

The lowest level was 21.42 per cent on March 27.

"It's great to have such positive news at this time and let's keep watching the weather," he said.