Work is underway preparing Sydney's desalination plant so it can be switched on if the city's dam levels continue to fall during the NSW drought.

The desalination plant has sat dormant in Sydney’s south since 2012 but is due to be turned back on if the city’s water levels drop below 60 per cent.

Dams were at 65 per cent capacity on Wednesday having fallen almost one per cent in the previous week.

NSW Utilities Minister Don Harwin says repairs to the desalination plant – which fixed damage caused by a 2015 storm – have been complete and testing is now underway at the Kurnell facility.

The plant can produce up to 250 megalitres of fresh water a day, approximately 15 per cent of Sydney’s water demand, according to the state government.

By Tom Rabe