Premier Roger Cook made the remarks at Kalgoorlie's Mt Charlotte Reservoir, where water from the Golden Pipeline first flowed in 1903. He said the upgrade would "futureproof" the Goldfields and Wheatbelt regions for generations.
"We looked very closely at the idea of a desal plant at Esperance and then piping it up to Kalgoorlie," Mr Cook said. "It was decided, through engineering design, that we were better off increasing the capacity of the Goldfields pipeline rather than building a whole new pipeline up from Esperance."
But he said desalination would still be needed. "I think we will need a desalination plant at Esperance. We will need desalination plants the length and breadth of this state, both as part of a growing economy and drying planet."
During last year's election, the WA Nationals promised $100 million towards an Esperance desalination plant to pipe water to Kalgoorlie-Boulder. Labor's then-water minister, Simone McGurk, dismissed the proposal as "unviable" and a "thought bubble".
On Monday, Water Minister Daniel Pastorelli confirmed the government utility Water Corporation was in the early stages of planning for a desalination project at Esperance.
Construction is also progressing on two significant desalination plants in WA: the $2.8 billion Alkimos plant near Perth and the $1.1 billion Dampier plant in the Pilbara. The Goldfields water supply scheme took five years to build during WA's 1890s gold rush.