In a press statement released on Tuesday, Mr Taylor announced that he had written to the Minister for Sustainability, Environment, Water, Population and Communities, Tony Burke, the problematic development of the Muray-Darling Basin Plan.

Mr Taylor said balancing social and economic impacts of the plan against the Water Act 2007 posed a “significant challenge”. However, he said the Authority could not “compromise the minimum level of water required to restore the system’s environment on social or economic grounds”.

He said the Authority would take into account feedback received during the consultation process, but only to the extent permitted under the law.

Mr Taylor said a sustainable plan for the Murray-Darling Basin required “far more than a decision by the Authority on how much water should be transferred from human uses to the environment”.

He said the success of the plan depended on the ability of the Commonwealth and States to work collaboratively, adding that the MDBA was “neither empowered nor equipped to undertake the entire complex task”.

“Discussions, planning and addressing the full gamut of environmental, economic and social issues should commence immediately,” Mr Taylor said in a statement.

“This process should not be delayed by the Authority’s report on the sustainable diversion limits on water for human uses required by the final Basin Plan, due at the end of 2011.”

He warned that any delays in release of the plan would lead to increased community concerns and investment uncertainty. Delays would also threaten the success of the initiative.

Mr Taylor said he would leave the role of chair at the end of January 2011.

The resignation has not deterred the Government from pressing ahead with the reform. Mr Burke has refused to reconsider the plan.

“I am determined to continue with the job of reforming the Murray Darling Basin,” he said in a statement.

“I will ensure that Mr Taylor’s resignation will not detract from our goal of seeing health rivers, strong communities and continued food production.”

Mr Burke said the MDBA had a different “interpretation” of the Water Act and the Government would stand by its own interpretation.

He added that no decision had been made on Mr Taylor’s replacement.