NSW Opposition Leader Barry O'Farrell has ended months of speculation on Tillegra Dam, confirming the Coalition opposes the building of the controversial $477 million project.
The decision puts renewed pressure on the NSW Government to decide whether it will proceed with the dam, which is still awaiting state planning approval.
The issue is likely to be a key battleground for next year's State election, particularly in the marginal Hunter seats of Newcastle and Maitland.
While wanting to court the environmental vote, the Opposition had been wavering in its position on Tillegra for months.
Its hand was forced by a Wilderness Society television advertisement due to air last weekend.
The ad was scripted to say: "The Premier wants to build the Tillegra Dam. The Coalition is undecided. But we have a choice, let's protect the Williams River."
The commercial now says that the Opposition does not want to build the dam. It will air tonight.
Mr O'Farrell released a statement last night confirming the advertisment's sentiments.
"The NSW Liberals and Nationals oppose the Tillegra Dam and call on the Keneally Labor Government to scrap the project," Mr O'Farrell said.
"There is no contract in place and nothing has been signed. We hope this continues to be the case.
"The Keneally Labor Government should ensure there is no contract signed before the March state election.
"Taxpayers cannot afford another $500 million Rozelle Metro debacle."
Upper Hunter MP George Souris warned in March that a Coalition Government would not want to pay large penalty fees to rip up contracts entered into by the Keneally Government.
Last night a spokesman for the Opposition was unable to say what the Coalition would do if Tillegra contracts were signed, saying only "we'll cross that bridge when we come to it, at this stage there is no contract".
Belinda Fairbrother, a campaign co-ordinator from the Wilderness Society Sydney, said the TV advertisement had been reshot to reflect the Coalition's new position.
It was "just the start" to ensure the dam would be "impossible to ignore" come the state election, she said.
Conservationists say Tillegra dam poses a significant threat to the Hunter estuary and wetlands because it will reduce freshwater flows from the Williams River.
The State Government has argued the dam is necessary to secure the Hunter's water supplies in the event of extreme drought.
The project is waiting for approval from the Department of Planning under Part 3A critical infrastructure provisions and must also pass a Federal Government environment assessment.
A spokeswoman for the NSW Office of Water said the department supported the dam.