The Queensland government has agreed to fund a new dam in the Granite Belt, home to the drought-ravaged towns of Stanthorpe and Warwick.

Granite Belt secretary Amanda Harrold said Emu Swamp dam would be relatively small, but would be life-changing for locals who are currently on extreme water restrictions. 

The project is expected to be completed by 2022 and will be the first new Queensland dam in a decade.