A Water NSW spokesperson confirmed they completed a report on sites near Canowindra for the proposed Belubula Dam late last year and have submitted it to the NSW State Government for consideration.

Among the earmarked locations are Needles Gap and Cranky Rock, underneath which the expansive Cliefden Cave system runs.

The limestone caves, home to 400 million year-old marine fossils and a vulnerable species of bat, would be flooded if the 90,000-megalitre dam goes ahead.

So far, almost 2500 people have signed a petition to save the caves.

Harry Burket of the Save Cliefden Caves campaign helped to rally more than 100 people at a meeting in Orange last year.

He said the group will be holding meetings in Sydney and hopefully Cowra or Canowindra too over the coming year in order to educate people about the cave's significance.

"We're trying to create a broad public movement to create awareness about this well-kept secret. It's a catch-22 situation. The caves are so well preserved because no one knew about them, but because of that they're now under threat," Mr Burket said.

Bruce Welch is also working on the campaign.

He made a submission to the Agricultural Competitiveness Green Paper on behalf of the caves and has more recently nominated them for State Heritage listing.

"Water security is an emotive term, it's like using 'mothers and babies', everyone's in favour. Building more dams is not the way to solve water security problems, especially in drought," Mr Welch said.

"There's been no information given to landholders, it's a pretty appalling situation. All knee-jerk reactions to water security are poor ideas. If this dam goes ahead, someone further down the Lachlan system will miss out."

The Member for Burrinjuck Katrina Hodgkinson said she has received petitions concerning the dam proposal but it is still "early days".

"With any new infrastructure there's going to be big challenges. That's why they're assessing the environmental impact. There's a whole process to go through for that where there will be full community consultation," Ms Hodgkinson said.

"I'm well aware of the need for secure water storage in the central west. I grew up on a farm, I understand what it's like when you're without water. We can't go through a drought like the millennium drought and not take action."

Mr Burket said the Save Cliefden Caves campaign is also mindful of water storage issues in the region but believes the end does not justify the means.

"If building that dam will affect the caves it's not worth it," Mr Burket said.

A spokesperson for the Minister for Natural Resources, Lands and Water said the government will release the report soon.