Northern Grampians Shire Mayor Wayne Rice fears GWMWater's removal of water from Lake Lonsdale has jeopardised its recreational use.
The water authority removed water from the lake in mid-December for environmental flows along the Wimmera River.
The lake was 29 per cent full on Wednesday, while it was 77 per cent full at the same time last year.
Lake Lonsdale is a headworks lake with recreational facilities.
Cr Rice said GWMWater's 'environmental flows' from the lake were a little bit hard to believe.
"We feel as the catchment area, that we are entitled to retain more water so we can have a bit for our recreational use, as much as it is us who supply other lakes further to the north," he said.
"I would well expect the lake to have such a low water level in the next six to eight weeks that it will be of absolutely no value to anybody.
"There will be no environmental flow out of it."
Cr Rice said people were 'up in arms' about the poor state of the lake, which was a vital economic boost to the wider Wimmera region when it had enough water.
"I heard about 70 tonnes of yabbies got taken out of there after the drought broke," he said.
"Now Lake Lonsdale is at a very low point and is too dangerous for boating, fishing, water-skiing and jet-skiing.
"I'm hearing that fish are dying all the way around the lake because they get trapped in holes.
"It's not healthy for anyone."
Cr Rice said when he first joined council in 2005, GWMWater asked council if it would like to manage the lake and council declined.
"One minute GWMWater doesn't want it and the next it sounds like it's of great financial value to them," he said.
"What we are looking for from GWMWater is a guarantee that they will never let the lake fall below 86 per cent."
GWMWater communications manager Helen Friend said Wimmera Catchment Management Authority had requested water be taken out of Lake Lonsdale for environmental flows to the Wimmera River.
"Environmental water is also being released from Taylors Lake and Rocklands Reservior," she said.
"We take a number of factors into consideration when deciding where water will be released from, such as the efficiency of water storage and water quality.
"It also depends on where the water needs to be put into the Wimmera River.
"If the catchment authority wants it in the higher parts of the river, then Lake Lonsdale is the only part of the river system that can do that.
"Lake Lonsdale is also a very large, shallow lake, so there is a lot of evaporative loss in hot weather.
"It lost 9.5 per cent the week before last through evaporation alone, so it is not very efficient from that point of view."
Mrs Friend said GWMWater recognised the importance of recreational use.
"But we operate the system as a whole and our number one priority is the security and quality of supply for our rural, domestic and urban customers," she said.