 Hose pipe bans are already affecting households |
The water industry has promised to tackle shortages in south-east England, as the region faces its worst prospects of a drought for 30 years. Environment Secretary David Miliband held a summit between water companies, regulators and consumer groups.
He promised to review hosepipe bans and said drought orders should be used "sensitively and progressively".
Firms agreed to "redouble" efforts to repair leaks and to keep customers informed on ways to conserve water.
The summit came as two water firms announced huge rises in profits.
Frank discussions
The Environment Agency, Consumer Council for Water and the regulator Ofwat have agreed to co-operate with companies in planning for the prospect of a third consecutive dry winter.
Mr Miliband pointed out that the South East has experienced 19 months of lower than average rainfall, leaving it in danger of drought.
He said there had been a "very frank discussion" at the summit "about the challenges that we all face".
"Everyone fears that a third dry winter in a row would pose serious challenges for the industry," he told the BBC.
"Everyone recognises that we do need to make sure that leaks are driven down. They need to do that in a context where people want to keep prices down."
Mr Miliband told BBC Radio 4's Today programme almost �4bn was invested in sewerage and leak repairs every year.
Drought orders
Some 13 million people are living with hosepipe bans, and three water companies in the South East have been granted drought orders.
 |  If we don't make the profits, we can't make the investment |
The orders, granted by the government and valid for six months, can be used to impose restrictions on non-essential water usage. An order came into effect in Sutton and East Surrey Water, which supplies 650,000 people in the South East, at the weekend - the first such order in England and Wales for 11 years.
Southern Water was granted an order for Kent and Sussex, while a single order has also been made for the entire Mid Kent Water area, although neither company has used them.
Record profits
The water summit came as United Utilities, which supplies water, electricity and gas in north-west England, announced a �481m profit.
South West Water's parent company Pennon also unveiled a huge rise in its profits this year, making �111m.
Water UK, which represents water companies, said households in England and Wales paid 81p a day for their water, which was "enormous value".
Spokesman Barrie Clarke said: "If we don't make the profits, we can't make the investment.
"There's more to do with leakage, there's more still to do with improving the quality of the environment. But enormous value has been created."
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