The UNESCO World Heritage Centre wrote to the federal government in January outlining its concerns about the dam's environmental impact statement.
The NSW government proposed raising the dam wall to mitigate the risk of flooding in the Hawkesbury Valley region.
After the devastating 2019-2020 summer of bushfires that claimed the lives of more than 30 people, burned thousands of homes and millions of hectares, the technical report was conducted by International Union for the Conservation of Nature, an advisory body to UNESCO.
It concluded the dam could worsen such impacts.
"The potential of the project to exacerbate bushfire impacts or affect the recovery prospects of key species and habitats, as requested by the World Heritage Committee, are not considered adequately," it said.
A NSW parliamentary inquiry was established in 2019 to consider the government's proposal to raise the dam wall.
The upper house committee focused on the adequacy of the environmental impact assessment process to date, any potential impacts on world and Indigenous cultural heritage and the ecological value of the Blue Mountains National Park.
In an interim report published last October, the committee recommended the dam wall should not be raised without the prior and informed consent of Indigenous representatives and without assurance that heritage areas would be protected.
Colong Foundation for Wilderness chair and former NSW environment minister Bob Debus said the report found raising could breach international law.
"The UNESCO advice is saying quite clearly that raising of the Warragamba Dam wall is totally inconsistent with Australia's obligations under the World Heritage Convention," he said on Wednesday.
Australia is a signatory to the World Heritage Convention and federal law stipulates the federal environment minister cannot approve a project that is inconsistent with the convention.
NSW Western Sydney Minister Stuart Ayres said last week the government had spent three years doing an extensive environmental impact assessment.
"We're talking about 80 per cent of Sydney's drinking water supply, I'm not going to treat that as a trivial matter," he said defending the project estimated $1.6 billion cost.
Mr Debus described Mr Ayres as "the Black Knight of Warragamba Dam".
"Stuart Ayres is putting Australia on a collision course with the World Heritage Committee, a situation that can only end with an in-danger listing for the Blue Mountains," he said.
