LOS ANGELES (Reuters) - California Governor Jerry Brown on Saturday signed into law a $687 million drought-relief package to deal with a water shortage he has called the worst in the state's modern history.

"This legislation marks a crucial step - but Californians must continue to take every action possible to conserve water," Brown, a Democrat, said in a statement.

The largest share of the drought relief package - $549 million - comes from accelerated spending of bond money voters previously approved in two ballot propositions.

Those measures will fund storm water recapturing, expanded use of recycled water, better management of groundwater storage and stronger water conservation measures.

The legislation also has a program to deal with contaminants that become more concentrated in groundwater when less water is available to dilute them.

In addition, the legislation appropriates $25.3 million in food assistance and $21 million in housing assistance to people affected by the drought, such as farm workers who have lost employment in bone-dry agricultural fields.

While much of the United States has been pummeled by a series of snow storms, California in recent months has struggled with a drought that threatens to inflict the worst water crisis in recorded state history.

California grows half the nation's fruits and vegetables and is the top state by value of agricultural goods produced. Large-scale crop losses in the state could lead to higher consumer prices, especially for tree and vine produce grown only here.

A large winter storm soaked many parts of the state on Friday and Saturday, but officials said the precipitation would be too little to offset the ongoing drought.

"Obviously this rain helps, but we need a lot more to get caught up," said Carol Smith, meteorologist for the National Weather Service in Oxnard just northwest of Los Angeles.

Some coastal and valley regions of Southern California and the state's Central Coast have received 4 inches of rain, with up to 11 inches in the mountains and foothills, according to the National Weather Service.

Story continues

In this drought, Los Angeles has received less than 6 inches of rain since July 1, which is about half the normal amount over that time period, Smith said.

"Neither the rain storms we're having now, nor this legislation will eliminate the drought and its impacts," state Senate President pro Tem Darrell Steinberg, a Democrat, said in a statement.

"But just like any amount of rain and snow will help, saving a year or even a few months in getting money out the door and getting water projects on-line can benefit California enormously," Steinberg said.

Brown and several top state lawmakers announced the drought-relief legislation on February 19. The two drought relief bills that make up the legislative package passed the California state Assembly and the Senate nearly unanimously.

(Reporting by Alex Dobuzinskis in Los Angeles, additional reporting by Kevin Murphy in Kansas City, Missouri; Editing by Dan Grebler)