The town will become the first in Australia to run out of water in six months, if it gets no substantial rain and if emergency action for new water supplies fails to work.

Even recent good rains in some of the worst drought-affected areas, which saw farmers dancing in sodden paddocks, only slightly topped up Goulburn's dwindling water supplies. It will take a lot more rain to break the drought and fill town and farm reservoirs.

The worst drought in 100 years is forcing Australians to close the tap on profligate water use and turn treated waste, most of which flows into the sea, into drinking water. Some waste water is already recycled to irrigate gardens and sports fields and this is set to increase.

Goulburn residents are likely to become the first Australians to start drinking treated sewerage returned directly to their water supply -- a practice long-shunned elsewhere.

"Someone's got to do it. And then it will probably go through the rest of Australia," Goulburn mayor Paul Stephenson said.

Scientists agree.

"Closed systems taking and treating waste waters and putting them back into the system are the way of the future," said scientist Colin Creighton of the government-backed Commonwealth Scientific and Industrial Research Organisation.

A high-tech A$30 million ($23 million) sewerage treatment plant could be delivering drinking water to Goulburn's dams within five years.

Stephenson ticks off other emergency action.

Goulburn is drilling bores to tap underground water and will draw 5 million litres a day from September, at a cost of A$1.5 million.

It is also building a A$3 million pipeline to tap a large waterhole outside the town.

"We're still working on the worse-case scenario on how to keep the place going. It's a logistical nightmare," he said.

TOWN'S FUTURE

Australia is the world's driest inhabited continent and the vicious cycle of droughts and floods has been a feature of the landscape since humans arrived millennia ago.

But scientists say global warming is changing rainfall patterns, particularly in the populated southwest and southeastern corners, causing a long-term drop in annual rainfall and greater extremes of weather.

For towns such as Goulburn, this makes the future much more uncertain.

Should the town close down? Can it be moved? Can water be brought in by truck and train? Should industries be closed? Should 300 maximum-security prisoners be moved?

The jail is just one problem in an endless list.

Jails in New South Wales state are overflowing. The maximum-security prisoners could not be moved, Stephenson said. But water shortages are creating friction with the jail.

Townfolk were limited to 100-second showers. A report that prisoners' showers would be cut to five minutes created "a bit of a local issue", Stephenson said.

Shower-time for the almost 500 prisoners has now been brought into line with the rest of the town.

Elsewhere, schools in the town are improving their water systems. Public swimming pools are closed and the water was turned off in the parks long ago.

Goulburn's water usage has been halved and will be cut further if it does not rain. Each person is now down to 120 litres a day -- a washing machine full --- compared with 400 litres in big cities.

The town's two biggest businesses, a wool-scouring plant and the Southern Meats abattoir, are cutting water consumption by one-third, but are constrained by export standards.

Shutting them down would be tantamount to closing the town.

Bringing water in by truck or train is not feasible due the logistics.

WATER REVOLUTION

Goulburn has become a microcosm of a water crisis spreading around the country.

The current dry spell is so severe that farmers say it is worse than the 2002 drought, which has been classed as the worst in a century.

Sydney, the largest city, Perth, the western capital, Toowoomba in southern Queensland, Tamworth in northern New South Wales, and Yass in southern New South Wales all have low supplies.

The central New South Wales towns of Cowra, Forbes, Parkes, Condoblin, Lake Cargelligo and Ivanhoe fell this week to 8 percent of dam capacity and might need emergency supplies.

With its dams less than 40 percent full and severe water restrictions in place, Sydney is in a hot debate over whether to install a desalination plant.

Last month Western Australia doubled its annual budget for water infrastructure to A$715 million, including A$315 million for a desalination plant. It is considering building a second plant.

At one stage, building a A$2 billion, 2,500-km canal to bring water to Perth from the tropical north was under debate.

Toowoomba is considering a sewerage-to-drinking-water plant.

Like it or not, Australians will have to adapt.

On average, each Australian uses 280 litres of water per day, compared with the Netherlands on less than 150 litres. The Netherlands re-uses its water 8-10 times, Creighton said.

In the dusty sheep town of Goulburn, blazing a trail for new water-use systems is a matter of survival, he said.