Harrington Park Lake is one of the region's most iconic waterways but recent weather events are wreaking havoc on its ecosystem.
Residents were warned about the dangers of coming into contact with the water at the lake due to toxic levels of blue-green algae in December last year.
The elevated algae levels were discovered through routine testing and warning signs were placed around the lake to advise residents of the potential risk.
However, Camden Council has secured $20,000 in funding from the Australian Government's Communities Environment Program to improve water quality at the lake.
The funding will be used to install a floating wetland in an upstream area of the lake.
Camden mayor Theresa Fedeli said the funding would support the future of a healthy Harrington Park Lake.
"It's important to maintain and improve our water quality, especially during a drought," Cr Fedeli said.
"Harrington Park Lake unfortunately experiences blue-green algal blooms as a result of nutrients in the water from local run off.
"Installing a floating wetland in a waterbody upstream of the Lake will help improve water quality by removing nutrients and sediments from stormwater entering Harrington Park Lake and ensure its long-term viability.
"I thank the Federal Government for their funding and look forward to the completion of the floating wetland."
The installation of a floating wetland will be supported with a community education program to reduce stormwater pollution.
Blue-green algae infestations may cause gastroenteritis or skin and eye irritations after contact in humans.
Animals can become very sick or die as a result of drinking water affected by the algae.
Dogs are particularly vulnerable as they also ingest algae by licking their coats.
Blue-green algae is naturally occurring and poses no threat in low levels.
It looks like green paint-like scums on the water, near the edges, or as greenish clumps throughout the water.
It makes the water appear dirty, green or discoloured and generally has a strong earthy odour.
Higher levels of the algae occur in periods of favourable weather conditions when there is still or slow flowing water, abundant sunlight and sufficient levels of nutrients, a council spokeswoman told the Advertiser last year.
Residents can assist in minimising potential blooms by ensuring that they pick up dog droppings, avoid over fertilising garden/lawns and ensure piles of dirt used for landscaping have adequate sediment and erosion controls.
The council spokeswoman said providing residents dont drink the lake water, swim or undertake any activity on or in the lake there is no risk to their health.
Council undertakes regular sampling of a number sites across the local government area, she said.
The main lake of Harrington Park and Gregory Hills are the only sites where high levels of blue-green algae were detected.