Recent downpours have done little to replenish water levels in rivers and reservoirs already low after one of the driest periods on record, according to the agency.

The shortage has prompted six water companies to launch drought management plans to ensure supplies to customers remain unaffected.

The Environment Agency says the situation will not improve unless there is 120% of the average rainfall between now and next April.

"We should not become complacent just because we have had heavy rainfall in the last few days," said the agency's chief executive, Barbara Young.

"England and Wales has had an exceptionally dry summer and autumn and while water supplies have provided us throughout this period and supplies are secure for the coming winter, unless we receive higher than average rainfall between now and March we could be faced with water restrictions and serious water shortages in 2004."

The period from February until now has been the second driest in England and Wales since 1921.

The worst hit region is the South East where over the past three months some parts have seen as little as 30% of their average rainfall leaving many rivers flowing at only 20% of the norm for the time of year.

The Environment Agency recently granted Thames Water two drought permits, allowing it to increase abstraction from the River Thames and a groundwater source for the next four months.

Decisions are awaited on applications for similar permits from United Utilities and South East Water, while Southern Water, Severn Trent, and Welsh Water are also expected to apply .

Among the agency's tips for saving water are to replace worn tap washers to prevent dripping, use the minimum amount of water for boiling kettles and saucepans, select half-load programmes on dishwashers and washing machines wherever possible, and wash vegetables in a bowl rather than under a running tap.

"While the water companies play a leading role in ensuring we have sufficient water supplies, it is the responsibility of each and every one of us to ensure we use water wisely," said Ms Young.

"If the entire adult population of England and Wales turned the tap off while brushing their teeth, it could save up to 180 mega litres per day - that's enough to supply water to nearly 1.2 million people or nearly 500,000 households."