Brasilia, Brazil (BBN)-Brazil's Environment Minister Izabella Teixeira has said the country's most populous region is experiencing its worst drought since 1930.
The states of Sao Paulo, Rio de Janeiro and Minas Gerais must save water, she said after an emergency meeting in the Brasilia, reports BBC.
Ms Teixeira described the water crisis as "delicate" and "worrying".
Industry and agriculture are expected to be affected, further damaging Brazil's troubled economy.
The drought is also having an impact on energy supplies, with reduced generation from hydroelectric dams.
‘POOR PLANNING’
The crisis comes at a time of high demand for energy, with soaring temperatures in the summer months.
"Since records for Brazil's south-eastern region began 84 years ago we have never seen such a delicate and worrying situation," said Ms Teixeira.
Her comments came at the end of a meeting with five other ministers at the presidential palace in Brasilia to discuss the drought.
The crisis began in Sao Paulo, where hundreds of thousands of residents have been affected by frequent cuts in water supplies, says the BBC's Julia Carneiro.
Governor Geraldo Alckmin has taken several measures, such as raising charges for high consumption levels, offering discounts to those who reduce use, and limiting the amounts captured by industries and agriculture from rivers.
But critics blame poor planning and politics for the worsening situation.
The opposition says the state authorities failed to respond quickly enough to the crisis because Mr Alckmin did not want to alarm people as he was seeking re-election in October 2014, allegations he disputes.
In Rio de Janeiro state, the main water reservoir has dropped to level zero for the first time since it was built.
Environment Secretary Andre Correia acknowledged that the state is experiencing "the worst water crisis in its history".
There is enough water in the other reservoirs, however, to avoid rationing in Rio de Janeiro for at least another six months, Mr Correia said.
BBN/SK/AD -24Jan15-10:00am (BST)