Residents of a NSW town are being asked to sign an agreement stating they will no longer drink the same household water they’ve been guzzling for years.

Hunter Water is asking residents in northern Dungog to sign a legal document agreeing that their tap water “is not intended for human consumption”.

The state-owned corporation says these customers have known “for several years” their water wasn’t potable but residents insist they previously understood it was safe to drink.

“Our water met the drinking water guidelines up until the guidelines were changed in 2010,” Jenni Denniss told AAP on Friday when describing Hunter Water’s conduct as “unconscionable”.

“Hunter Water is not doing their job – they are in the business of supplying drinking water.”

Shooters, Fishers and Farmers Party candidate John Preston has accused Hunter Water of trying to dupe residents into signing away their legal right to have safe drinking water.

“The contract asks residents to guarantee they won’t sue Hunter Water if they become sick drinking the water supplied to their homes,” Mr Preston said in a statement.

“The water supply in question is the same that residents have been using for decades.”

A Hunter Water spokeswoman on Friday confirmed the mains water being provided to some Dungog residents was raw and didn’t meet current national drinking water guidelines.

It was for irrigation and other purposes, the corporation said.

“We have been working with these customers over the past 18 months to ensure they have access to another supply of water for their potable needs,” the spokeswoman said in a statement.

“Hunter Water has progressed two solutions based on engineering advice and community feedback including a rainwater tank solution or an onsite water treatment kit.”

Utilities Minister Don Harwin declined to comment.

-AAP