Methane levels in water supplies close to shale gas extraction sites in Pennsylvania and upstate New York are up to 17 times higher than normal, according to research.

A study on the impact of drilling in the region found that about 85% of drinking water wells within 1km of a natural gas well were contaminated.

The study is the latest to challenge efforts to sell natural gas as a cleaner, safer source of energy, and could build momentum for greater federal governance of the industry.

The US has a headstart in the global market, but companies plan to exploit shale gas sites all over the world – for example there is an experimental drilling site in the UK, near Blackpool. The gas companies argue that shale gas provides a relatively cheap source of energy that is lower carbon then oil and coal. Environmentalists say that the chemicals used in the extraction of the gas can cause significant pollution and that when methane releases are taken into account shale gas is not as low-carbon as it appears.

The federal government last week appointed a panel of experts to look into fracking, or hydraulic fracturing – the technique that has enabled drillers to tap huge reserves of natural gas buried deep underground.

The experts are charged with producing safety recommendations of an industry that has so far operated with relatively little government regulation.

Pennsylvania sits on the largest known gas reservoir in the US, and companies expect to drill about 2,000 wells this year.

Stephen Osborn, one of the authors of the study, which is published in Proceedings of the National Academy of Science, said: "If you are a homeowner and a well is going to be installed within a kilometre of your house, I think that it may be a good time to think about water quality, and maybe do some basic water sampling. I would be a concerned homeowner if I lived within one kilometre of a natural gas well."

The study found no evidence that contamination comes from the chemicals used in fracking – although there has been previous documentation of such cases.

The rapid expansion of natural gas drilling in Pennsylvania over the past few years has produced widespread reports of contaminated drinking water wells, as well as potentially dangerous methane migration. Environmental organisation EarthJustice has taken to calling such events fraccidents. Even one or two gas company executives have admitted a need for greater oversight of drillers.

Environmental organisations, meanwhile, argued that drilling permits are issued with little regard for safety. A report last week found that natural gas sites have been approved within two miles of 320 day care centres and 67 schools in Pennsylvania.

Drillers have lost control over wells during fracking, including one last month in Bradford County that spewed chemicals for 19 hours. Meanwhile, homeowners have been issued with gas detectors to lower the risk of an explosion.

About a million homes in Pennsylvania get their water from private wells, and today's study is bound to deepen safety fears. Under current Pennsylvania state law, the industry is allowed to drill within 200ft of a private water well.

Fracking involves pumping water, sand and chemicals deep underground into horizontal gas wells at high pressure to crack open hydrocarbon-rich shale, and extract natural gas.

But the researchers noted that the Environmental Protection Agency does not regulate methane, and there has been little research on its potential health effects in drinking water. The gas can asphyxiate in high concentrations, and carries the risk of explosion.

It was unclear whether the methane gas had leaked from poorly cemented natural gas wells, or had escaped through natural rock formations.