More than 99 per cent of the state remains in drought, despite record rainfall in Sydney which will see the desalination plant switched off next month and water restrictions wound back.

As Sydney recovers from the worst drought on record, the situation is still “diabolical” for most of the state, in what is likely to create tensions in the Coalition ahead of the May budget.

Data presented to the government this week shows 99.4 per cent of NSW is still in drought, with about one-third in the highest category – “intense drought”.

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