The federal government's strategic water purchases in the Murray-Darling Basin failed to ensure value for taxpayers' money, an independent audit has found.
An auditor-general's report released on Thursday found the water department did not develop a framework to maximise value on water buybacks.
The audit examined water transactions made through limited tender arrangements between January 2016 and December last year.
Under the Murray-Darling Basin Plan, the government buys water entitlements to improve the health of rivers, wetlands and floodplains.
The auditor-general found the department did not appropriately consider opportunities to generate competition between sellers through its limited tender process.
Former water minister David Littleproud asked for the audit which looked at $190 million of strategic water buybacks.