South Australia and Victoria have settled a legal stoush over Victoria's water trading cap in the Murray-Darling Basin.

The Rann government launched a High Court challenge in 2009 arguing Victoria's four per cent cap on water trading was an unconstitutional imposition on trade.

But both governments have now issued a joint statement saying there's no need to pursue the dispute since they've reached a mutually acceptable settlement.

Premier Mike Rann is pleased with the result.
 

"Ultimately our job is to get the best deal for South Australia. This way we've got the water we need, including bucket loads from the sky and flood waters, that means we don't have to spend more money going to court and that's got to be a good thing."

But the opposition's Mitch Williams says the legal challenge was a waste of time and taxpayers' money.

"The Victorian government did make changes but none of them were made because of the threat and court action by South Australia. Those changes were already in the pipeline before Mike Rann made his bold annoucement. This thing has been a farce from start to finish, but unfortunately probably a very costly farce."

Photo:Getty/Getty images News/Robert Cianflone/Staff