Nearly half of the population in England and Wales now live in areas of "water stress" where supply might not keep up with demand - a problem usually associated with parched regions such as north Africa and the Middle East.

The huge pressure on water supplies from large and wealthy populations in areas with relatively low rainfall is detailed in the most comprehensive report yet on the state of water resources by the Environment Agency.

The report, which will be published in the new year, warns that many rivers, lakes, estuaries and aquifers are already being drained so low that there is a danger to wildlife and a risk to public supplies in dry years, especially as climate change brings drier summers while the population is increasing.

People are also using far too much water. The study says average water use is 148 litres per person per day, and as high as 170 litres in the south-east of England - compared to a government target of 130.

The agency will use the report to argue for aggressive increases in the number of homes with water meters to reduce demand, and will support proposals by water companies to spend billions of pounds on infrastructure projects such as reservoirs and desalination plants to improve supplies and protect the environment. It is also expected to argue for a new system of regulation under which companies would be allowed to earn more profit if they reduced demand, a system pioneered in California and already being considered for UK energy companies.

"We're seeing a shift from how we ran things over the last 100 years," said Trevor Bishop, the agency's head of water resource policy. "The Victorians gave us a legacy of infrastructure ... they predicted what the future needed and provided for it. We can't carry on doing that ad infinitum.

"We [will] have 10-20 million extra people, we have got climate change; all the things we have done in the past will get less and less certain and more vulnerable, so what we're doing is trying to manage demands down."

The report brings together for the first time new and published data about the availability and use of water for 21 water companies, 24.3m households and a population of 54.4m. Scotland is covered by the Scottish Environment Protection Agency, and Northern Ireland by the devolved administration.

On average, water demand is 10% of "effective rainfall" - what is left over after evaporation to recharge rivers, lakes and aquifers. But because rainfall, population density and water use vary widely, a large area from Kent, north to the Humber estuary and west beyond Oxford is internationally classified as "water stressed" because abstraction is normally more than 20% of effective rainfall.

By this definition, 10.5m households and 24.1m people have less water available per person than Morocco and Egypt, says the report. Though hotter, these drier countries have lower populations.

"We don't look like [Morocco] because we have got a very, very sophisticated public water supply system [and] a different environmental situation," said Bishop. "What [water stress] means for us is the risk of extreme drought and the infrastructure we rely on to supply our water resources would come under stress."

Other statistics show:

• 30% of homes have a water meter, and on average they use 13% less water than unmetered households;

• In a third of the 119 catchment areas into which water bodies are divided, legal limits on abstraction were (or could be if fully used) exceeding safe levels for habitats, including chalk rivers and wetlands;

• Measured against European standards due in 2015, more than 90% of sites were or were probably at risk of failing because of pollution from "point sources" like factories and/or run-off from farms and roads - though many of these by only one of up to 37 measures;

• Under expected climate change, river flows would rise in winter but would fall on average by half in summer and autumn, and some by as much as 80%.

Water resources were "in many respects far better" than in the past, but rising demand, lower supplies and tougher standards meant a raft of policies were needed to keep taps flowing and the environment protected, said Bishop.

Water companies have submitted plans to invest £27bn in maintaining and improving infrastructure for water supplies and sewage treatment in the five years between 2010-15, up from nearly £20bn in the previous five years. The total, and the impact on customer bills, will be decided by the industry regulator, Ofwat, in 2009.

There were "pros and cons" to plans put forward, including desalination and new reservoirs, said Bishop. The agency also wants companies in the south-east to speed up plans to increase water metering to 80% of homes by 2030.