Water Minister, Penny Wong, says she was not aware that the Government's top business adviser, Rod Eddington, is a director of the company that sold the Toorale property to the NSW and federal governments for $23.7 million last week.

The governments bought the cotton station from the British-owned Clyde Agriculture, which is part of the Swire group on which Sir Rod sits as a director.

He is also chairman of the Federal Government's Infrastructure Australia board, and his connection to Toorale was reported in a national newspaper last month, when it was revealed the Government was considering the first acquisition of land and water rights as part of the drive to save the Murray Darling water catchment.

But Senator Wong's spokesman said yesterday that neither she nor anyone in her office had been aware of the Eddington connection.

"The agreement on the purchase of Toorale was consistent with government policy to purchase parcels of land and water, where the water could be returned by the Commonwealth to the environment to improve river health, and the land could add to the reserve system managed by a state government," the spokesman said.

The NSW Government bought the property with "substantial" help from the Commonwealth.

The water would be transferred to the Commonwealth Environmental Water Holder, the spokesman said.

Liberal senator Bill Hefferan has attacked the deal as a "disgrace", claiming there was no need to buy the land to get the water entitlement.

But Senator Wong's spokesman said this was not correct, as there were parts of NSW where land and water rights had not been separated.