Environmentalists say Australia could face an influx of so-called "climate change refugees" from the tiny Pacific nation of Tuvalu.
Residents in the Pacific island nation are currently suffering severe fresh water shortages, with each person limited to two buckets a day.
That is due to drought conditions and because rising sea levels have contaminated ground water supplies.
New Zealand and Australia are flying water supplies into the islands, while Richard Marles, Australia's parliamentary secretary for Pacific Island affairs, told Al Jazeera that his country also planned to send desalination plants to meet the islanders' immediate needs.
"In the long term, we are trying to put water tank around the island that could be used when it is raining, but right now Tuvalu is experiencing its worst drought."
Tuvalu is reliant on rainwater collection for drinking water and has been severely affected by a weather pattern across the Pacific known as 'La Nina' that has brought drought conditions.
The neighboring New Zealand-administered territory of Tokelau has also declared a state of emergency after the drought left its 1,400 people with less than a week's supply of water.
Earlier this week, Murray McCully, New Zealand's foreign minister, said the drought was not confined to Tokelau and Tuvalu, one of the world's smallest independent states with less than 11,000 people, and could cause food shortages across the South Pacific.
La Nina causes extreme weather, including both drought and floods, and was blamed for deluges and floods in Australia, Southeast Asia and South America late last year and earlier this year.