Changes to Southern Water’s abstraction licence for the River Test in Hampshire pose “a challenge” for the company as it looks “more likely” it will need to apply for a drought permit this summer.

Michael Gove backed moves by the Environment Agency in March to force Southern to cut the volume of water that it abstracts from the river by 40 per cent.

Under the new terms, the quantity that Southern can pump out of the chalk river will be capped at 80 million litres (Ml) per day, compared to the current maximum of 136 Ml.

While the water company acknowledges that the licences handed down by the environment secretary are a “critical part” of securing the health of the Test and Itchen rivers, it says the new limits will mean finding “fresh resources”.

With the dry winter which saw only 76 per cent of the average rainfall across the South and South East, Southern suggests it is more likely it will have to apply for a drought permit later this summer.

The company also saw less than 40 per cent of average rainfall in Hampshire last month and said it has been monitoring forecasts of river flows.

If the Environment Agency grants drought permits, Southern Water will introduce “temporary bans” on some types of water use such as hosepipes or pressure washers to cleans cars or patios.

Nigel Hepworth, water resources policy manager at Southern Water said: “The Test and the Itchen rivers are among the world’s finest examples of chalk streams. They are sometimes called ‘England’s rainforests’ such is the diversity of life they support.

“Everyone who cares about these rivers will welcome new rules restricting how much water can be taken from them and when.”

But he added: “These licences do pose a challenge. The county has always relied on the rivers for drinking water and new limits mean finding fresh resources.”

Southern Water said it will spend more than £800 million over the next ten years on schemes including a desalination plant and pipelines to enhance the regional grid so it can import more water from neighbouring areas.”

“Until then the Environment Agency has agreed to Southern Water applying for drought permits to allow us to continue taking water in lower flows. In return we are making big investments to create and protect habitats,” Hepworth said.

He argued that while it would be “inconvenient and disruptive” having to impose water restriction measures – protecting the environment is a “task for all of us”.

Southern Water’s warning followed a meeting of the National Drought Group (NDG) on 4 June, which was chaired by Sir James Bevan, chief executive of the Environment Agency.

The group brings together government departments, water companies and environmental groups to assess the latest water resource situation and actions being taken to reduce the risk of drought.

After the heatwave last year and a dry winter, this spring again saw lower than average rainfall. The group discussed how some river flows have declined to lower than normal for the time of year.

The NDG’s position statement said: “While there is no threat to public water supply, these conditions are putting particular pressure on the environment and agriculture.”

Most water companies reported good reservoir storage for the summer but the position statement acknowledged that “one or two” water companies may need to apply for drought permits later this year to allow them to take more water than usual from rivers or boreholes.

“While the current situation is manageable and there is no present threat to public water supplies, a third dry winter in 2019/20 would cause significant problems for summer 2020,” the position statement outlined.