A permanent water shortage throughout Oxfordshire with homes deprived of "basic needs" is a real possibility, the leader of Oxfordshire County Council has claimed.

In his role as chairman of the South East of England Regional Assembly (Seera), council leader Keith Mitchell painted a grim picture of Oxfordshire's housing future - with thousands of homes being built without the water supplies to service the families living in them.

Mr Mitchell said: "Without more investment in water supply and sewage treatment, millions of families living in the South East risk regular hosepipe bans and severe water shortages.

"Water is the most basic of human needs, yet the Government is forcing more houses on the South East without being sure where it is going to come from."

He added: "Out of the entire South East, Oxfordshire is going to be the worst hit. The situation will become critical within five years if Government action isn't taken."

Hillary Bennett, a Thames Water spokesman, said: "Population growth is a major concern for us in our ability to maintain water supplies.

"We are looking very seriously at ways of improving conservation and updating our network of pipes. Stopping leaks and any other forms of wastage can help."

Thames Water wants to build a £700m reservoir near Abingdon to prevent water shortages, but Mr Mitchell said the measures could come too late.

Meanwhile, Deputy Prime Minister John Prescott is backing efforts to recycle water from baths and basins. Mr Mitchell voiced his concerns to Seera in advance of a decision, expected at the end of the month, about where 500,000 homes will be built in the South East. The homes will be built in the region over the next 20 years.

Research has revealed that within the next few years the demand for water due to new housing developments will be twice as much as available supplies.

There will be no alternative, unless emergency action is taken, but to ration supplies, Mr Mitchell said.

The Environment Agency predicted that "many customers" in Oxfordshire would face water restrictions, unless new sources of water are found.

Paul die Salvo, a director of Friends of the Earth, said: "Mr Prescott's dubious plans for a million more homes in the wider South East look even more reckless if the way they are plumbed guzzles already stretched water supplies."

But a spokesman for the Deputy Prime Minister said: "We are confident water companies can meet new domestic demand. Water companies have a good track-record at managing supplies and demand for water.

"Homes of the highest quality design and standards of efficiency are an important element of sustainable communities. We want new housing in the growth areas to achieve water saving of between 25 per cent and 30 per cent."