Water supplies are in crisis in parts of Australia

Environment experts warn that more than a quarter of the rivers in Australia are in danger of drying up amid the worst drought in 100 years.

At a meeting in Canberra, leaders approved a plan which will see a reduction in water drawn for irrigation and a new national water commission.

Prime Minister John Howard called it an historic agreement, although Western Australia refused to sign the deal.

"This has been a tremendous day for the future security of water supply in this country," Mr Howard told reporters, after the Council of Australian Governments agreed to the plan.

'Big challenge'

The BBC's Phil Mercer in Brisbane says Australia is the world's driest continent - and there is general agreement that the country has to use water more efficiently.

Our correspondent says the 10-year plan attempts to balance environmental concerns and the needs of the community.

At the heart of the initiative is a A$500m ($350m) scheme to revitalise the Murray-Darling river basin.

It is one of the most important water courses in the country and stretches across four states in south-eastern Australia.

In recent times, it has been badly affected by excessive irrigation and a lack of rain.

"The big challenge is to save the stressed, over-irrigated inland areas of this continent," said New South Wales state Premier Bob Carr.

Under the new plan, a national water commission will be created to oversee a national water market, which will regulate water used by agricultural industries.

KEY INITIATIVES A$500m ($350m) to return water to environmental hotspots on Murray River Commitment to national water trading system Creation of water rights

Farmers, whose export markets are worth billions of dollars, are to be compensated for cutting back on irrigation.

Our correspondent says there was a concern that projects to help revive other struggling rivers will not be funded.

The Western Australia Premier, Geoff Gallop, refused to sign the deal, arguing that it did nothing to address the problems faced by his region.