A railway bridge culvert beside Tawe St is a pinch point for the March Creek channel, where gravel accumulates and a beam can block some of the water flow.
"It needs modification to be able to work properly," council Three Waters city development engineer Mike Perkins said.
"Something needs to be done with that bridge, and how it’s constructed, to allow the water to go through that area."
However, downstream effects needed to be considered to avoid flooding other areas, Mr Perkins said during a civic affairs committee meeting this week.
The bridge also likely had heritage value, he said.
A remedy was required, because this was where the choke point was.
Regional council science and resilience general manager Tom Dyer said staff had been working on understanding the problems at Middlemarch and coming up with solutions.
"When we do this work, we need to be sure any changes are not going to exacerbate flooding for landowners downstream," Mr Dyer said.
The next step in this process was finishing hydraulic modelling and it was anticipated this would be completed early next year, he said.
The issue was raised at the city council meeting by the Strath Taieri Community Board.
Board deputy chairwoman Anna Wilson told the council flooding prevention needed to be treated with urgency.
"This is our top priority and, as previously highlighted, there is an ongoing and absolute need to resolve as a matter of urgency issues within and adjacent to the Middlemarch township in regard to flooding."
Mrs Wilson acknowledged collaboration between the two councils, but noted there had been several floods since a large one in November 2018 and she said this had made it difficult to encourage businesses to operate in the town.
"To date, no significant major works have been undertaken to effectively reduce the likelihood of a similar event reoccurring."
Some minor works had been completed, but adverse weather was increasing and the issue remained a serious concern for the community, she said.
Board member Terina Geddes said flooding in the town was averted last month when emergency powers were invoked to have an excavator carry out channel clearance work at the railway bridge.