Oxfordshire will start to run dry in six years unless moves are made towards building a £1bn reservoir near Abingdon, Thames Water warned last night.
As the company unveiled its management plan, it said water restrictions would be in place from 2014 if its measures were not implemented.
These include fixing leaks, installing meters and having the reservoir 'on stream' by 2021.
Last night, opponents of the reservoir said Thames Water had not proved the need for it.
Nick Thompson, a spokesman for pressure group Gard (Group Against the Reservoir Development), said: "There is absolutely no need for this reservoir if there is a much more sustainable approach to water supply.
"We are confident the Thames Water proposal for the reservoir is not the most sustainable, or in the best interests of the customer. If it was unavoidable then we would not be resisting the reservoir."
Sue Rees, a member of group Reservoir Affected Parishes, said: "I still don't think Thames Water has demonstrated or provided a good reason for this particular thing."
Thames Water spokesman Don Sharples said: "We are trying to reduce the risk of hosepipe bans or other restrictions.
"If these proposals go ahead, the level of service we should achieve would mean there would be no more than one hosepipe ban every 20 years."
The report estimates that if water use continued at its current rate, there would be a deficit of more than 39 million litres a day in Oxfordshire and Swindon by 2014.
People now have 16 weeks to respond to the plan. Environment Secretary Hilary Benn will ultimately decide whether the reservoir should go ahead.
Thames Water chief executive David Owens said: "New resources, such as the reservoir proposed in Oxfordshire, will be essential."
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