After years of delays and budget blowouts, the $400 million enlarged Cotter Dam has started collecting water for the ACT.

The embattled Cotter Dam reached its full height in December 2012 and now the 80 metre wall has begun its real task of impounding water.

The dam is expected to take three to six years to fill, storing 78 gigalitres of water for the Territory, 20 times the capacity of the old dam.

Project manager Ray Hezkiel says the impoundment marks a real milestone for the project.

"Effectively the dam is now a dam," he said.

"Up until now we've been working away at getting the wall up and today marks the day we can say we're actually storing water."

But Mr Hezkiel says today is bitter-sweet as it also marks a farewell to the previous Cotter Dam.

"We start to lose sight of the dam wall as it becomes inundated and effectively remains in place under water," he said.

"I guess an inadvertent benefit of having the old dam wall there is that it acts as a bit of a sediment trap as well, so it does provide some kind of protection to the new dam wall."