Warragamba provides Sydney's drinking water, the supply of which could be limited if the dam is drained.
Proposals to raise the wall have been slammed by UNESCO conservationists out of concern for the Blue Mountains.
The state government wants the federal government to split the proposed $1.6 billion cost of raising the dam wall at a time when state coffers are stretched due to the COVID-19 pandemic.
The Hawkesbury Community Alliance instead wants the dam drained by up to 12 metres before floods arrive.
"Our community needs flood mitigation now, not in the distant future. Ten years is too late," spokeswoman Samantha Magnusson said.
"(Drainage) is the best option for urgent flood mitigation for the community, who are filled with fear and uncertainty about what ... coming weeks might bring."
Meteorologists have warned Australia is in for a third year of La Nina weather, meaning more rain for NSW as it grapples with the devastating fallout of two recent major floods.
Hawkesbury locals heard from a University of NSW engineering expert, Dr Stuart Khan, on Saturday who said slightly draining the dam ahead of floods threatened Sydney's drinking water supply.
Dr Khan said other water sources would be needed to help prop up the water supply if Warragamba needed to be drained.
"Reducing the current water storage in Warragamba Dam is a realistic alternative to raising the dam wall," he said.
"No solution provides complete protection from flooding, maintaining a lower water storage in Warragamba can significantly mitigate many floods, reducing peak flood heights and enabling additional evacuation time."
A recent independent report and a separate parliamentary inquiry on NSW's flood response suggested raising the dam wall could delay key infrastructure flooding by 11 hours, including the vital evacuation route on Windsor Bridge.
