Water NSW has issued another red alert for blue-green algae at Chaffey Dam, near Tamworth

It comes just days after a previous red alert - which had been in place since December - was lifted last week.

Water NSW issued the new alert on Tuesday, after testing revealed the algae bloom had reached the warning level again.

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The authority advised locals to steer clear of the water at Chaffey Dam.

The type of algae identified can be toxic, and Water NSW warned people could come down with gastro if they swallow the water, and boiling it does not remove the toxins.

The authority's algae alert said contact with the water, through swimming or recreation activities, can cause skin or eye irritation.

It warned that people should not eat mussels or crayfish from red alert warning areas, and any fish caught should be cleaned and washed thoroughly in uncontaminated water and any internal organs disposed of before consumption.

"People are advised not to enter the water, not to drink untreated water or bathe in water drawn from the dam while this red alert level warning is in place," a Water NSW spokesperson said in a statement.

"Livestock owners are reminded to continue to check stock water supplies for blue-green algae and to remove stock from foreshores where surface scum is visible or blue-green algae are suspected."

Chaffey Dam is the main water supply for Tamworth - though town water has not been drawn from it in months - but Water NSW confirmed the city supply is not impacted by the red alert.

A low-level green alert is in place for the Peel River downstream of the dam, meaning water users in that area should be cautious.

It is unknown how long the alert will stay in place for this time, but regular water testing is taking place at Chaffey Dam.

More information about the algae blooms and the health risks is available on the Water NSW website.