Millions of households in southern England could be forced to have water meters under proposals to reduce usage following the summer drought.
Customers with meters are thought to use about 10-15% less water
A map of "water stressed areas" could be in place by 2009, with suppliers having to consider compulsory meters.
Environment Minister Ian Pearson's announcement came as the first company to get approval for compulsory meters launched a pilot scheme in Lydd, Kent.
Folkestone and Dover Water said 700 homes would be the first affected.
The installation of the meters in Lydd, between January and March next year marks the start of a programme to install 30,000 compulsory meters over the next nine years.
The company said 90% of its customers' homes would have meters by 2015.
Government estimates show that 70% of customers will see their bills go down once they have water meters, while 30% will pay more.
Folkestone and Dover's application to bring in compulsory meters was approved in March this year following two dry winters.
"We have found that customers with meters reduce their non-essential use of water by around 10-15%," said managing director David Walton.
He admitted many customers had reservations about the meters, which are installed free.
He said information would be delivered to every house affected and a company rep would call.
"In particular we will be looking at potential impacts on vulnerable customers and working with voluntary organisations and social services to ensure support and advice is provided when needed," he said.
Mr Pearson said on Monday a public consultation on metering would take place early next year.
He said there was no proposal for national compulsory metering, nor was metering an alternative to a tough approach on reducing leaks.
'Bizarre to wait'
"Increasing the coverage of water metering in areas of serious water stress must get proper consideration by the water companies because of the water savings it will deliver," he said.
The Consumer Council for Water said it supported the proposals.
"This is about areas which have long-term concerns about water supply in the future," said spokesman Andrew Marsh.
But Shadow Environment Secretary Peter Ainsworth said it was "bizarre" to wait until 2009 to map water-stressed areas.
"We already know where these areas are," he said.
"The South East, in particular, is under severe water stress and yet water efficiency is being all but ignored under the government's ambitious housing plans."
Folkestone and Dover Water lifted its ban on hosepipes and sprinklers at the beginning of October.
But bans continue for customers of Sutton and East Surrey Water, Southern Water, Thames Water, South East Water, Mid Kent Water and Three Valleys Water.