Millions of people in England and Wales are being seriously affected by pollution and global warming, the Environment Agency says.
The increase in traffic is going to hamper CO2 targets
A major report by the agency praises air and water quality improvements but says we must plan for climate change.
The "green health check" says flooding and extreme weather will be among Britain's biggest problems.
Called A Better Place?, the "state of the nations" report updates an assessment last made five years ago.
It details areas where environmental markers are getting better, such as the improvement in air quality and the reduction in waste from households.
But it also highlights negative trends, such as the amount of traffic pollution now experienced in many urban centres.
Overall, the Environment Agency says real progress is being made, but adds that the "report card" is undeniably mixed and on some markers a lot of work still needs to be done.
Issues relating to climate change, wildlife and flood risk are flagged as areas where the greatest ground has to be made up, and where future policy action should be concentrated.
"Climate change and the issues that surround it are the biggest challenge - and that flows through to some real pressure points for people in the future in terms of their water supply and their risk of flooding," Baroness Barbara Young, the agency's chief executive, told BBC News.
The agency says the report draws on 80 of the most dependable and revealing environmental data sets for England and Wales, giving the most comprehensive picture of environmental trends in 2005.
Overall, only the quality of water is unequivocally classed as "better".
England's and Wales' rivers and bathing waters are said now to be the cleanest on record.
Eighty percent of bathing waters meet the toughest EU standards, compared with 45% in 2000.
And pesticide levels in rivers fell by 23% in 2003, compared with the mean for 1998-2002.
Other markers, though, have at best qualified ratings.
Air quality, for example, is rated "overall, much better" but many towns and cities suffer from traffic pollution, the agency says, and industrial emissions of nitrogen oxide have increased by 5% since 2000 as a result of an increase in coal-fired electricity generation.
Wildlife is rated "slightly better but still poor".
SOME GOOD NEWS
Number of days of moderate and poor air quality in urban areas little changed on 2000
Serious pollution incidents falling since a peak in 2001, but still 1,250 incidents in 2003
Otters have spread to 36% of rivers in England, up from 23% just a decade ago
66% of houses built in England in the last few years were on previously used land
Amount of hazardous waste produced last year fell to 4.75 million tonnes
The agency says many habitats are improving, but significant numbers of plants, reptiles, amphibians, freshwater fish and invertebrates remain under threat.
Consumption of resources and waste creation get a qualified "slightly better".
Despite strong economic growth, the amount of raw materials being used has been maintained close to 2000 levels.
The total tonnage of domestic rubbish in England and Wales fell for the first time in 2003/04.
At the same time, recycling reached its highest level to date, with on average 17% of the domestic bin being put to new use.
It still takes 75kg of raw materials to make a mobile phone, however, and people are using more water despite signs climate change will further squeeze this precarious resource.
On climate change and flood risk, the picture is described as "worse".
The impacts of climate change are becoming more real, the agency says, but while the Kyoto target to cut greenhouse gas emissions by 12.5% by 2012 will be met, the more challenging target to cut carbon dioxide (CO2) emissions by 20% by 2010 will not.
In large part this is because of the growth in road traffic, which increased by 7% between 2000 and 2004.
By 2002, vehicles accounted for a quarter of CO2 emissions in the UK.
Experts predict the Thames Barrier will be used more frequently
And on flooding, the agency says the number of people at risk is going to increase, not least because of the predicted effects of a warmer, wetter climate.
Of the 55 times the Thames Barrier has been raised against tidal surges since it was built in 1983, 28 were in the last five years, the agency points out.
Environment minister Elliot Morley welcomed the report. "It recognises where the government has made important moves forward, for example in air and surface water quality, reduced pollution levels and recycling.
"It is useful in identifying current environmental threats and areas where there is more work to be done, for example, diffuse water pollution, transport pollution, the efficient use of water and energy and managing the impacts of climate change."
SOME BAD NEWS
Gains from improved fuel and engine technology being offset by a road traffic growth
70% of UK marine fish stocks now below safe limits; over-fishing and climate effects
Nitrate levels in groundwater still rising and exceed drinking water limits in some areas
Eroded soils have degraded trout and salmon spawning beds in some rivers
Households using even more energy; up by 2% since 2000
Friends of the Earth executive director Tony Juniper said: "Cleaner air, rivers and better wildlife sites may show that we are gradually learning to look after our environment, but this will be worth little if we cannot tackle the threat of climate change.
"The government must take urgent action to ensure we reduce our carbon dioxide emissions from all sectors, and it should do this by committing to a 3% cut in emissions year on year."