ENVIRONMENT groups have called for a coal-fired power station proposed for the Latrobe Valley to be scrapped due to Victoria's drastic water shortage.

Greenpeace and Environment Victoria have called on the Bracks Government to withdraw $50 million in funding promised for the 400-megawatt coal-fired power station to be operated by HRL at Loy Yang. The Federal Government has also set aside $100 million for the power station, which would open in 2009.

The environment groups say the state's coal-fired energy generators are already putting Victoria's water resources under huge stress.

Greenpeace energy campaigner Mark Wakeham said the five power stations in the Latrobe Valley used the equivalent of almost a third of Melbourne's total water use.