Environment minister Ian Pearson gave southeast English utility company Sutton and East Surrey Water the order on Monday, effectively curbing or banning outright non-essential uses of water in the area it serves for six months.
The Environment Agency's water management director, David King, suggested the message about water conservation was not getting through.
"People have the perception that there is a lot of water, yet we have less water than parts of the Sudan or the southern Mediterranean," he told London's Evening Standard newspaper.
Prime Minister Tony Blair's official spokesman said Tuesday that the onus was on utilities to implement water-saving measures, and it had encouraged them to tackle issues like leakages.
Some 13 million people in southeast England are already subject to hosepipe and sprinkler bans -- some since last year -- as two successive dry winters have left reservoirs and underwater aquifers sorely depleted.
Rainfall in the region over the last 18 months has been much lower than during the 1974-76 drought and very similar to the serious drought of 1932-34, according to the Environment Agency.
Between October 2005 and the start of this month, about 390 millimetres (15.35 inches) of rain has fallen -- only 85 percent of the average. The long-term average for the same period is 450 millimetres, it added.
Heavy rainfall last week increased river flows for a few days but has made little difference to the long-term position.
The densely populated, and therefore water-hungry, southeast is prone to water restrictions because groundwater provides 70 percent of supply; in Sutton and East Surrey it provides 85 percent.
The Environment Agency has warned there is a "real risk" of standpipes -- a common sight when they were last used in the long, hot summer of 1976 -- being introduced into parts of the region later this year if nothing is done now.
In 1976, many households were without tap water throughout the day as consistently high temperatures led to reservoirs emptying and river levels dipping to record lows.
A minister for drought was appointed and water-saving measures were introduced such as using dishwater to flush toilets and restricting baths to just five inches (12.7 centimeters) of water.
An Environment Agency spokesman told AFP that they hoped the situation would not reach that stage, which was why it was urging Britain's largest supplier, Thames Water, to apply for a drought order "immediately".
Two other water companies -- Southern and Mid-Kent -- are already seeking orders while another utility, Essex and Suffolk Water, was being urged to introduce a hosepipe ban by the end of May.
Some 650,000 people in 270,000 households and 18,000 businesses are affected by the current drought order, but that could rise to 2.5 million people if extended to Southern and Mid-Kent, according to The Independent newspaper.
If Thames Water is granted a similar order, the number of people affected could be as high as 10 million, it added.