Rivers including the one Ratty rowed Mole along in Wind in the Willows face running dry far more often under new laws that will increase the water taken from them, according to critics of the government's water bill, which is debated by MPs for the first time on Monday.

Already one in seven of England's rivers have unsustainable amounts of water drawn from them, causing serious harm to the fish, animals and plants living there. At particular risk are chalk streams, a very rare habitat almost completely confined to England. The River Pang, a tributary of the Thames in Berkshire and whose water voles are thought to be the inspiration for Ratty in Kenneth Grahame's classic story, is one of just 160 chalk streams. The waterways, many of which already run dry, host otters, salmon, trout, crayfish and water buttercups but are prized by water companies for the very clean water that has been filtered through underwater acquifers.

The new laws will allow for the first time all private holders of abstraction licences to sell their water to water companies, a move that would almost double the water able to be taken. Most of the licences were issued 50 years ago and were granted forever. Currently, 30bn litres a day are taken from rivers, 10% more than is ecologically sustainable, but licences exist for a further 50bn litres a day.

"The licence system is completely broken, unsustainable and out of date, having been set in 1960s with no regard to how much water could be sustainably taken out," said Dr Rose O'Neill, a water expert at WWF.

Maria Eagle, Labour's shadow environment secretary, said: "The serious environmental concerns are entirely justified and ministers should rethink their approach."

Ministers acknowledged the problem in 2011 and pledged to reform the system, with the then environment secretary Caroline Spelman saying: "We must act now to make the changes needed to keep our rivers flowing." However, the bill that will be debated on the house of commons on Monday no longer contains major reform plans but does include the changes allowing those with private abstraction licences to sell water to increase so-called "upstream" competition in the water industry. Ministers now say the licence regime will be reformed in another water bill in the next parliament.

"The government is dragging its feet for some reason and pushing it off to a future bill which may never happen," said O'Neill.

A spokeswoman for the department of environment, food and rural affairs said: "Making sure we have enough water is one of the major challenges we face in the coming years. We are making changes to the water industry to address these challenges and we will be consulting on abstraction reform shortly."

In July, Conservative MP Anne McIntosh, chair of the environment, food and rural affairs select committee, led a report which condemned the government's lack of "ambition and urgency". She said: "We heard about the environmental damage unleashed by over-abstraction [but] the government's plans – to reform the abstraction regime by the mid-to-late 2020s – will not take effect rapidly enough given that our rivers are already running dry."

"In the spring of 2012, after the dry winter, we saw rivers up and down the country drying up, with local groups having to rescue fish," said O'Neill. "Without reform the risk is going to go up even further."

The Environment Agency (EA), which manages abstraction licences and the protection of rivers, warned in June that other factors would compound the problem: "In the future, population growth, climate change and economic development are likely to increase pressure for more water to be abstracted. As a result, unless we all act now, further environmental damage may occur."

Ministers have already made one concession by pledging to make the water regulator Ofwat consult the EA before allowing private licence holders to supply water. But O'Neill pointed out that the EA is facing further deep budget cuts, which will see its staff cut by almost 3,000, a quarter of the total in 2009.