The Legislative Assembly resolved that the State Rivers and Water Supply Commission (VA 723) and each constituted water, sewerage, drainage and river improvement authority (except the Melbourne and Metropolitan Board of Works) be referred to the Public Bodies Review Committee for Review in April 1980. This resulted in the recommendation by the Public Bodies Review Committee that the various water and sewerage authorities be abolished and a new structure set up. This re-structuring was legislated by the Water and Sewerage Authorities (Restructuring) Act 1983 (Act No. 9895). The objectives of this Act were the following:

- to create interim administrative arrangements designed to facilitate the effective and efficient operation of the urban water industry in Victoria,
- to make that industry more structurally coherent and to reduce its geographical and functional fragmentation,
- to reduce the total number of bodies responsible for the supply of water and sewerage services,
- to define the role of the Minister in the development of new structures and procedures in the urban water industry, and
- to promote the more efficient, economic and effective allocation and utilization of the State's water resources.

As a result of this Act, new water and sewerage authorities referred to as Water Boards were created by Order-in-Council and the details of their constitution were published in the Government Gazette.

Under this Act, the Tarwin Valley Water Board was constituted by an Order-in-Council dated the 6th of December 1983. Dumbalk Waterworks Trust (VA 2316) and Meeniyan Waterworks Trust (VA 4722) were abolished and their geographical areas, functions, land, liabilities, obligations, powers, property, rights and employees became the responsibility of the new Water Board. The Commissioners of the former Waterworks Trusts were named as the interim members of the Board by the Order. The membership of the Board was to number eight, with four members each being elected by the Dumbalk electoral district and the Meeniyan electoral district. The boundaries of the board were to consist of those of the Dumbalk Waterworks District, Dumbalk Urban District, Meeniyan Waterworks District and Meeniyan Urban District. The Order was to become effective from the 1st of January 1984.

On 23 August 1993 application was made to the Minister under Section 100(2)(a) of the Water Act 1989 to appoint Leongatha Water Board (VA 2235) to take over the Tarwin Valley Water Board and for the abolition of the Tarwin Valley Water Board. The Order became effective from the 9 of September 1993.