The restrictions take effect from November 22.

"When compared with 2018, the water level in the dam show it is considerably lower," acting general manager Andrew Croke said.

"There is a lack of water flows in the Woolshed Creek which feeds into the water supply dam that supplies treated water to the township.

"Exacerbating the situation, the weather forecast for further rain is not encouraging."

The town's dam level is now at 60 per cent full.

Karina Rees from Taralga Rural farm and rural supply store said this is the first time she can recall water restrictions being placed on the rural town.

"Obviously it's a really difficult time for everyone," Ms Rees said.

"We don't use masses of water, but only time will tell.

"We've seen people carting water on rural property for some time now, the issue is more severe for more our customers out of town."

Crookwell and Taralga Aged Care chief executive, Joanne Boyce, said operations at the residential aged care facility were as normal.

Under level two water restrictions, people can use micro-sprays for 15-minutes and one hand held hose for one hour per day between the times of 7-8am or 6.30-7.30pm.

Sprinklers and fixed hose use is banned.

People are unable to top up or fill their private swimming pools.

People cannot wash cars by hose, and there is no watering of stock from the town water supply.

Contact the Upper Lachlan Shire Council and monitor the Crookwell Gazette for further updates.

The council has advised that other parts of the Upper Lachlan Shire are not on water restrictions.

There is no immediate risk of water carting and commercial, industrial and Institutional consumers can apply to the council's infrastructure department for an exemption.

The restrictions would be closely monitored.