The Murray-Darling Basin Authority announced a plan to return 27 to 37 per cent of water, or 3000 to 4000 gigalitres of surface water, to the system.
Australia could lose $805 million a year in agricultural production and 800 jobs.
The plan offered hope to Victoria's northern rivers and red gum national parks, Environment Victoria's healthy rivers campaigner Juliet Le Feuvre said in a statement.
"For years, Victorians have watched with dismay as our river systems have suffered from the combined effects of drought and over-extraction of water," she said.
"This is a once in a lifetime opportunity to restore balance to the way our northern rivers are managed so that our children can inherit healthier river systems and a more sustainable agricultural industry.
"Victoria's river red gum national parks have been literally dying for a drink and, although the recent floods have provided a temporary reprieve, it is essential that this new Murray-Darling plan is implemented in full to secure their long-term future.
"We recognise that in some areas the proposed changes may be challenging but the plan offers a path to a more sustainable future for these regions."