CANBERRA, Feb. 15 (Xinhua) -- An agreement on how to distribute water from Australia's largest river system is on the brink of falling apart after amendments were defeated at the Senate.

The Murray-Darling Basin Plan is a controversial bi-partisan agreement on how water that flows through the system can be used.

However, both Victoria and New South Wales (NSW) look set to walk away from the plan after proposed changes which would have reduced the amount of water returned to the environment by 70 gigaliters were defeated by the Greens and Australian Labor Party (ALP) in the Senate on Wednesday night.

The Murray-Darling Basin drains one-seventh of the Australian continent, represents one-third of agriculture production and is home to more than two million people.

The 2007 Water Act, put in place in the midst of one of Australia's worst-ever droughts, dedicated 7.9 billion U.S. dollars to reaching a national agreement on water use in the basin.

The main aim of the plan, signed into law in 2012, was to remove 2,750 gigaliters of water from irrigated agriculture and return it to the river system.

As of June 2017, more than 2,080 gigaliters had been recovered, primarily through the government purchasing water licenses and infrastructure improvements.

However, the NSW government on Thursday said it was "untenable" that the state remain a signatory to the plan.

"New South Wales under my stewardship will now start the process of withdrawing ourselves from the plan," NSW Water Minister Niall Blair said in a statement on Thursday.

"We will seek legal advice and unless Canberra can come up with a way to fix this, I won't be attending anymore ministerial meetings in relation to the basin plan.

"I am urging the federal government to fix the Senates sabotage and take every step necessary to prevent the short-sighted and politically motivated action that will destroy this historic reform."

Blair's Victorian counterpart Lisa Neville echoed his sentiment but the South Australian government has urged its counterparts not to walk away from the plan.

"If they walk away, what they're giving up is the down-water component which they desperately wanted. I can't see them, frankly, walking away more than a few days because their own constituency won't allow them," SA Water Minister Ian Hunter said.

"And the Commonwealth Government should threaten Victoria and New South Wales, if they do walk away from this, that they will withhold their funding."

South Australia was opposed to the amendments which were defeated on Wednesday night because they would have reduced water flow into the state by 1,100 gigaliters.

Federal Assistant Water Resources Minister Anne Ruston accused the Labor SA Government of putting pressure on their ALP colleagues to block the changes.

"I cannot see New South Wales and Victoria being prepared to come back to the table. This really was Russian roulette," Ruston said.

"They have basically shot themselves in the foot and the rest of us in the backside in the process.

"It would be a nightmare if you tried to take it to the (High) Court as Ian Hunter is suggesting that we should do."