Pollution is so severe in some stretches of the 6,300-kilometer (3,906-mile) river that new legislation is urgently needed to turn around the situation, the Yangtze River Water Resources Commission said in its report.
"Protecting water quality in the Yangtze river is now imperative," Xinhua news agency quoted the report as saying.
The report, which has yet to be published, said the amount of industrial waste pumped into the Yangtze annually stood at 30 billion tonnes in 2005, up from 15 billion tonnes a year in the 1980s.
Dozens of major cities including Shanghai, Nanjing and Chongqing, rely on the Yangtze for drinking water, according to the report.
Pollution as well as over-fishing were also a threat to several species of aquatic life, the report said.
Twenty fish species are on the endangered list and the white-flag dolphin, found only in the Yangtze, is on the verge of extinction, it added.
China is in the grip of an acute water shortage with around 300 million people lacking access to drinking water, according to previous media reports.
More than 70 percent of rivers and lakes are polluted, while underground water supplies in 90 percent of Chinese cities are contaminated, previous reports have said.