Australia's biggest river is running so low that Adelaide, the country's fifth-largest city, could run out of water in the next two years.

The Murray river is part of a network of waterways that irrigates the south-eastern corner of Australia, but after six years of severe drought, the worst dry spell ever, its slow moving waters are now almost stagnant.

Water levels in the Murray in the first three months of this year were the lowest on record and the government agency that administers the river, the Murray-Darling Basin Authority (MDBA), said the next three months could be just as grim.

With meteorologists predicting another year of below-average rainfall, the MDBA, is bracing for worse to come.

"We do need to ensure that we have a range of secure water sources for Adelaide and other towns along the Murray," agency head, Rob Freeman said.

But the MDBA faces an uphill battle, as the drought has drained water supplies across the south-eastern corner of Australia. The Murray-Darling basin named after the two biggest rivers that join to form the south-eastern catchment area now holds just 18% of its water capacity.

Although Freeman said he could not guarantee critical human water needs would always be secure, he added "It's important that we don't panic here."

Not even torrential rains, which flooded Queensland and NSW in the past month, have managed to rejuvenate the Murray.

Instead of rolling south, the waters seeped into the flat, parched earth, scorched by the long dry spell, the most severe of which has hit in the past three years.

The Murray currently holds 940 gigalitres, of which just 350 gigalitres are needed to meet the requirements of the three states.

But the problem is that most of the water in the river is lost through evaporation and seepage before reaching urban centres. One thousand gigalitres are needed to transport the 350 gigalitres along the river.

Now the MDBA is being forced to make hard choices. Over the past two years the MDBA has taken drastic measures, such as cutting off wetlands in South Australia, where Adelaide is the capital. But environmental scientists have warned the once teeming habitats may be permanently damaged.

So the MDBA has been releasing water to some of the more "iconic" flood plains, which have become tourist attractions.

Searing temperatures and stagnating flows have already begun to spawn algae outbreaks, rendering the water unsafe for drinking or recreational purposes.

Farmers are also facing more hardship as new plans are being drafted with new limits on the water they can extract from the Murray-Darling basin.

The neighbouring states of NSW and Victoria have offered to top up Adelaide's drinking supplies. But as they also draw water from the Murray-Darling river systems, they have made it clear that Adelaide, home to 1.1 million people, must repay the debt once the drought breaks.

But the MDBA, in its latest monthly drought update, says there's no sign of rain on the horizon.

"Overall, the outlook for the beginning of the 2009-10 water year is not good, and is likely to be similar to the previous two years," it said, adding that the drought will only break when "above average rainfall occurs for a sustained period of time".