Thames Water has been urged to apply for a drought order to try to curb London's water use.
A drought order could be used to ban many activities
The Environment Agency's call for "immediate" action comes a day after an order was granted in England and Wales for the first time in 11 years.
Sutton and East Surrey Water can ban car washing, filling swimming pools and watering parks and sports grounds.
Thames Water said it had no plans to apply for a drought order but was monitoring water stocks "day by day".
The company, which supplies a large area of London, introduced a hosepipe ban on 3 April, as the south-east continues to experience some of the driest conditions in the last 80 years.
A spokesman said: "Thames Water is much less reliant on groundwater, drawing 70% of its water supply from rivers and so, during periods of heavy rainfall, if we're quick we are able to store water in reservoirs."
He said the company was not currently applying for a drought order but was listening to the concerns of the Environment Agency, which is one of its regulators.
The spokesman said the hosepipe ban currently in place had resulted in a "2% impact reduction in usage" and that "every little bit helps".
Two other water companies, Southern and Mid Kent, are currently applying for drought orders.
The Environment Agency also said Essex and Suffolk Water should bring in hosepipe ban bans by the end of May so that water supplies were not threatened later in the year.
It comes after a report by the agency warned of another hot, dry summer, and possibly the most serious drought in a century.
Disappointing recent rainfall has added to problems caused by two dry winters in a row, which has resulted in less water being stored in natural reservoirs underground.