It also called for a rise in spending on infrastructure along with price rises of up to 20 percent to fund the replacement of old, leaky pipes, particularly in London.

Many UK water companies were forced to impose tough restrictions on water usage this summer, banning the use of hosepipes and sprinklers, because of low reservoir levels.

The Environment Agency said southeast England had endured its worst drought for a century.

"Parts of the UK are experiencing long term water shortages, so we need a range of solutions to keep the water running," said John Lawson, the ICE's Water Board chairman.

"Effluent water reuse is still a relatively untapped way of providing drinking water to meet growing long term needs."

Sewage can be turned into drinking water by processes which sieve and then chemically clean the water so it can be put back into rivers to be re-treated for human consumption.

In its annual State of the Nation report, ICE also suggested compulsory water metering to encourage users to save water in areas where it was scarce, together with the building of new reservoirs and desalination plants.

"Water consumer prices will have to rise to pay for new infrastructure -- an uncomfortable fact customers, the government and regulators must recognise," Lawson said.

"We currently pay less for our water than many of our European neighbours -- something that will have to change to keep our taps from running dry."

However Water UK, a body which represents Britain's water companies, said the ICE report gave a "false analysis" of future resources and accused it of "sensationalism".