LAANECOORIE Reservoir is flowing into the Loddon River for the first time in a decade.
Water started spilling from the reservoir, east of Dunolly, at the weekend for the first time in 11 years, with further over-flow expected in the early stages of this week.
The Loddon Weir at Fernihurst is also above minor flood levels, by almost half a metre.
Goulburn-Murray Water acting water resources executive manager, Mark Bailey said yesterday the level at the weir was fairly steady.
"It looks as though it's not going to get much higher," he said.
Dr Bailey said some water was coming towards Kerang, but would take several days.
"We might end up getting a bit of water down there, but it will take several days," he said.
"It's been very dry downstream of (Fernihurst) Loddon Weir."
Dr Bailey said the general outlook was the best since 2005/06, and that the authority has system operating requirements "stowed away" already.
Onlookers watched as water from the reservoir spilt into Loddon River for the first time in more than a decade.
Laanecoorie has suffered through drought, particularly in the last three years with low levels of water in the reservoir and the river.
While fishermen have continued to use the river, other recreational pursuits, such as camping and water-skiing, have dropped off.
Laanecoorie Lakeside Park manager, Jim Stewart said yesterday the improved water levels would see a boost to all recreational activities, livelihoods and town morale.
"It's going to be a real boost," he said.
Rain in recent days has lifted the month's total so far to 57.6mm, almost 20mm above average.
The annual fall is 372.3mm to date, just three millimetres below the town's 130-year rainfall average.
Regional rural water supplier, Goulburn-Murray Water has also announced allocations for northern Victorian systems.
The Loddon system allocation is at 26 per cent. It is the system's best allocation since 2005/06.
The Bureau of Meteorology issued a minor flood warning for the Loddon River at 9am yesterday morning, with Laanecoorie Reservoir expected to spill at levels exceeding minor flood levels.
The situation is a result of recent rainfall and saturated catchment conditions, with stream rises in the tributaries of the Loddon upstream of Laanecoorie have also been recorded.
The spilling of the reservoir has caused some minor flooding in the area. The Loddon Weir was at 3.79 metres yesterday morning, and was expected to remain above the minor flood level all yesterday.
Out-flows from the reservoir were also expected to exceed minor flood levels all of yesterday.
Mr Stewart said the improved situation provided a real boost for the town.
He said while it was too early to gauge the exact impact on business he was expecting an improvement coming into summer.
Mr Stewart said that all recreational activities, from swimming to fishing, would receive a good boost.
"Swimming has been difficult because the water has been low and dirty. It'll be a good flush-out for the fishing too," he said.
Mr Stewart said that water-skiing would be possible again by the end of the week.
Low water levels in recent times had made water-skiing impossible, hurting the business.
But he said other water-skiing spots had also improved.
"That won't necessarily have people flocking here as there's an improvement for water-skiing in many parts of rural Victoria," he said.
He said pressure had already come to bear on accommodation locally.
G-MW forecasts further improvement to Loddon allocations in coming months.
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