In documents uncovered in a call for papers from Greens MP John Kaye, Mr Costa was advised to defer issuing a directive to the Independent Pricing and Regulatory Tribunal (IPART) so that low-cost alternatives to the dam could be examined.

In an email to the Department of Water and Energy's assistant director Ben Taylor, senior manager Katy Brady also recommended a meeting between Mr Costa and relevant government bodies to discuss the accuracy of data supplied by Hunter Water.

"This could give rise to a Government decision to instigate an independent review of the HWC [Hunter Water Corporation] analysis, and thus an opportunity could be created to depart from the direction to build Tillegra," her email said.

But the release of an IPART report in January last year confirmed the minister pushed ahead with the directive that backed the $477 million dam.

Dr Kaye branded the "telling" email trail as more proof that the Government's case for Tillegra was "flawed and deceptive".

"For 15 months they have sat on official advice signed by the assistant director of the Department of Water to put it on hold," he said.

"It is now urgent they act on it."

Mr Costa defended his decision, saying there was no cheaper option to deliver the same water security for the Hunter as Tillegra Dam.

"Concerns raised with IPART in relation to Hunter Water's calculations have been dealt with by an independent SKM report, which was commissioned by IPART," he said.

But No Tillegra Dam spokeswoman Sally Corbett said the SKM report did not address whether the dam was the most cost-effective option for the Hunter.

"The report has been used as a misleading cover," she said.