Call to fit water meters in homes

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The statutory body also called for water companies to be required to sign up to efficiency commitments making them fund water saving measures in homes, in a scheme similar to the energy efficiency schemes for power suppliers.

The Environment Agency said it wanted better water efficiency labelling for appliances such as washing machines, tighter standards and cuts in VAT for the most efficient models, as part of efforts to reduce demand.

Charges for water should reflect how much people actually use to reduce wastage, while protecting vulnerable customers, a report from the agency said. And more needs to be done to reduce leaks from mains and domestic pipes.

In the report on water resources in England and Wales published on Monday the agency said many parts of the UK are already facing shortages of water - and climate change and an increasing population would make the situation worse.

While there is expected to be an increase in flooding and the risk of heavy downpours in the coming years, hotter, drier summers could put reservoirs at greater risk of drought and reduce the amount of water in rivers in summer months by up to 80% by mid century.

As a result, climate change could reduce the overall amount of water available by 10% to 15%, while forcing up domestic demand for water by 2% to 4% as, for example, householders need more to water their gardens.

There will also be greater pressure on water from agriculture in England and Wales as the world struggles to meet rising food demand and climate change makes growing crops in other countries more difficult, the report predicted.

At the same time our water supplies will need to meet the demand of an extra 20 million people by 2050 as the population grows.

The Environment Agency said that in many parts of England and Wales there was no more water to take without damaging the environment, including wildlife and their habitats. Extracting, treating, pumping and heating water for use adds to the carbon footprint of the UK, accounting for 6% of our emissions.