The East of England has been officially moved into drought status - with some river levels at the lowest levels ever recorded in the wake of the driest July since 1935.
However the Environment Agency said water supplies would remain resilient, as it repeated its plea to the public to use water wisely.
The announcement came after a meeting involving the agency, farming organisations and water companies on Friday morning.
Water minister Steve Double said: "All water companies have reassured us that essential supplies are still safe, and we have made it clear it is their duty to maintain those supplies."
Helen Smith, drought manager for Environment Agency in East Anglia, said: "We've already been taking action to protect the environment; monitoring rivers and groundwaters, working with water companies and sending teams out to help wildlife in difficulty.
"We've also been working with farmers, businesses and other abstractors to manage water availability and ensure that they get the water they need while maintaining our protection of the environment."
Anglian Water, the largest company in the east of England, said the drought declaration "serves to underline the seriousness of the situation" but said it still did not expect to impose a hosepipe ban this summer.
What are water supplies like in the East of England?
Anglian Water, which is the biggest water company in the region, said supplies were safe and the company was not planning to introduce a hosepipe ban at the moment.
Rutland Water, the biggest reservoir in the east is about 80% full, which is only slightly down on normal for this time of year.
But at Hanningfield in Essex the reservoir is close to a record low.
Regan Harris from Anglian Water said: "We don't feel we need to put a hosepipe ban in place to tell people.
"You only have to look out the window to see we all need to do our bit to conserve water supplies for the long term now, because it's not really this summer we're worried about so much, it's next year and we need a wet winter to secure supplies for next spring and summer."
What is the effect on water quality?
The hot weather is having an impact on water quality in places including Bedford and Cambridge.
Local authorities have issued warnings about the spread of blue-green algae blooms in the lakes at Bedford's Priory Country Park and Milton Country Park near Cambridge.
The blooms produce toxins that can be harmful to animals and humans and the councils are advising people to keep children and pets out of the water.
What effect is the drought having on farming?
At the moment arable farmers can irrigate their land, though water supplies are running short.
There is also little grass for livestock to graze on, so many farmers are having to use hay which is normally reserved for winter, which will increase their costs when they need to buy feed over the coming winter.
At the Holkham Estate in Norfolk they built their own reservoir to irrigate crops in 2011.
At the start of May they had 220,000 cubic meters - or 220 million litres - of water in it. Now for the first time since it has been built, they can see the bottom.
Harry Barnett, manager of Holkham Estate, said: "The big fear is moving into 2023. This year the team have worked really hard and they've managed to keep up with irrigation, moving pumps and hose reels.
"It's when we try to refill these reservoirs in the autumn and winter. If we don't see significant rainfall levels, it's going to be very challenging to refill this for the 2023 potato crop."
What happens now drought is declared?
Agencies and water companies must take action to manage water supplies and protect the environment.
The main organisations responsible for managing water resources during drought are the Environment Agency, water companies, and the government.
Water companies must state what they will do to reduce the demand for water. They can apply for a drought order to take more water, but must first demonstrate that they have made efforts to save it.
What about the risk of fires?
The National Farmers' Union said "tinder dry" standing crops and parched grass posed a huge risk of fires spreading.
That was highlighted when a homeowner filmed a crop fire raging through the Suffolk countryside on Thursday.
James Cutting captured the scenes near his home in mid Suffolk as fire tore through more than six hectares of fields in the tinder-dry conditions near the village of Thorndon.
Watch footage of the fire raging through the field
A farmer had to dig a firebreak to stop them reaching a thatched cottage nearby.
Like many fire services across the country, firefighters in Suffolk have been exceptionally busy as temperatures continue to soar.
Mark Hardingham, chair of the National Fire Chiefs Council, said: "The bigger risk at the moment is a combination of temperature and wind speed, which will contribute to fire spread and makes incidents harder to manage and extinguish."
However, he added brigades were "well prepared and have plans in place" to respond.