The government's environmental watchdog is calling for water meters to be installed in almost every home in England and Wales.
The Environment Agency is claiming that "near universal" water metering must be introduced to protect the country against water shortages caused by climate change and population increases.
And the body is also calling for water companies to be forced to agree to efficiency commitments to make them fund water saving measures in homes.
The report, published on Monday, also called for more action on leaking mains and domestic pipes.
Environment Agency chief executive Paul Leinster said: "Water is essential for life and vital to our economy.
"But climate change and population growth mean there may not be enough water in England and Wales in the future for people and the environment unless we start planning and acting now.
"People and businesses need to use less water, and wasting water needs to cost a lot more.
"The proposals in our new strategy cover actions that need to be taken by water companies, government, regulators, businesses and the public, and we need a joined-up approach to this problem to prevent it becoming a crisis."
And Environment Agency chairman Lord Smith told the BBC this morning that climate change will increase the problem over the next 40 or 50 years.
"Climate change, I'm afraid, is very much with us," he said.
"What that means for water across the country, in summer months especially, there is almost certainly going to be a lot less of it.
"One of the things that the science is telling us is that in summer months, water flows in some of our rivers are going to be down by almost half in 40 years time."
Lord Smith added: "That means that this very precious resource of water, that we have tended to take a bit for granted over recent years, we will need to be rather more careful about how we use it."
He noted that tariffs for water metering will need to be considered carefully before being introduced.
But he claimed that it would be a "fairer system" of paying for water because at present "the water guzzlers, with swimming pools, pay exactly the same as those who might be more careful with their water use".
The Environment Agency is proposing a basic tariff for all households, but to use extra water people should be made to pay more money.
But Lord Smith stated that there would be a special tariff for people who might need to use a lot of water, such as low income families with a lot of children.
"We have a right to access for clean water but we need to use it responsibly," he explained.
"We also need to look at the way in which the water industry is structured because at the moment there is an incentive for water companies to sell more water."
Environment secretary Hilary Benn responded to the report, noting that parts of England already experience serious water stress and climate change will "probably make this worse".
"As we said in our 'Future water strategy' published last year, the government's aim is to reduce household water consumption to 120 litres a day and that by 2030 near universal water metering would probably be needed across water stressed areas," he said.
"We have also commissioned two independent reviews looking at competition in the water industry and water charging, both of which will report this year."


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