Residents could end up drinking water recently 'recycled' from sewage.

Despite doubts in some parts of the industry, Thames Water has revealed it plans long-term research into reusing effluent, after a report by the Institution of Civil Engineers suggested it could help reduce water shortages.

Spokesman for the utility company Hilary Bennett said sewage could be turned into drinking water by sieving and chemically cleaning the liquid, but it would be a long time before it could be put into practice.

"We are intending to carry out research into reuse, which could help with supplies," she said. "This is long-term research and we don't have definite time scales."

But one key industry organisation poured cold water on the idea.

Water UK, which represents the water companies, attacked "sensationalism" in the ICE report. It said it did not want a change in the current policy on effluent reuse as the industry was already part of a "natural water cycle" by taking the water, treating it and pumping it back in to the environment.

England is facing possibly the most serious drought of the past 100 years, after low rainfall over the last two winters.

Thames Water has banned the use of hosepipes and sprinklers to help conserve supplies.

That ban is expected to stay in place for part of the winter and reservoirs are still below normal levels.

John Lawson, chairman of the Institution of Civil Engineers, called for more investment.

He said: "Parts of the UK are experiencing long-term water shortages, so we need a range of solutions to keep the water running. Effluent water reuse is still a relatively untapped way of providing drinking water to meet growing long-term needs."

The ICE's State of the Nation report also highlighted rising demand for water. It called for a steep change in the current level of investment in water infrastructure, which could lead to a 20 per cent increase in prices, putting UK water charges in line with European cities like Frankfurt and Brussels.

It also said compulsory metering in water-scarce areas would give households incentives to save water.

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

* Oxfordshire County Council has given a lukewarm response to Thames Water's plans to construct a massive reservoir near Steventon.

The company has maintained the £1bn reservoir is needed to meet future demand in the South East, but the council highlighted issues such as its impact on transport and the need for a proper debate.

Council leader Keith Mitchell said: "We're at the early stages of this."