The state government has given approval to Hunter Water to offer 11 of the properties the utility bought for the $477million project to the former owners.

It comes a year after the proposal was officially rejected on planning grounds and about nine months after the Coalition took office.

The 11 properties were bought with clauses that provided the former owners with the first option to buy back the land.

Finance and Services Minister Greg Pearce said the sale process would include independent land valuations and could take up to a year, and was part of fixing Labor’s ‘‘Tillegra Dam mess’’.

‘‘The green light for sales will provide landowners and the community with the certainty and assurance they need to get on with their lives,’’ Mr Pearce said.

‘‘Hunter Water will soon contact these landowners requesting their formal advice as to whether they remain interested in purchasing back their former properties and to outline the next steps.’’

Documents tabled to Parliament in October said the former owners with ‘‘right of first refusal clauses’’ previously owned 908hectares of land needed for the dam project.

‘‘This equates to around 15per cent of Hunter Water’s landholdings in the Tillegra area,’’ an internal government email dated August noted.

The government had been criticised recently for not moving faster to begin the sales process.

Hunter Water sought expressions of interest from former owners in buying back their properties earlier this year.

But at a recent meeting with ministers, Dungog Shire councillors were given assurances the government would report back on plans for the Tillegra land in early 2012.

The Greens had called for the government to unequivocally rule out a Native Dog Creek dam option in the Tillegra area, as part of work to develop a new Lower Hunter water plan.

Mr Pearce said stakeholders and the community would be consulted ‘‘throughout the plan’s development’’.