Hosepipe bans are already in place in many parts of the South East
A drought order has been granted in England and Wales for the first time since 1995, banning the non-essential use of water.
Under the six-month order, Sutton and East Surrey Water can ban car washing, the filling of swimming pools and watering of parks and sports grounds.
The company supplies water to 650,000 people in the South East.
Environment minister Ian Pearson said he expected the company to use its new powers sensitively.
The Consumer Council for Water (CCWater) has asked the company not to be "gung ho" as it implements the order.
Filling of privately owned swimming pools other than for medical treatment
Watering of gardens and allotments, parks or sports or recreation surfaces by sprinkler or hosepipe
Filling of ornamental ponds other than fishponds
Operation of car washes
Washing of vehicles or aircraft other than for safety or hygiene
Cleaning of building exteriors other than windows and cleaning of industrial premises
Cleaning of windows by hosepipes or sprinklers
Operation of ornamental fountains or cascades
Sutton and East Surrey applied for the drought order as the region suffers its driest period for 70 or 80 years.
The area covered by the water firm spreads from Horley, in Surrey, up to Sutton in south London, and reaches from Cobham and Dorking in Surrey over to Edenbridge in Kent.
Southern and Mid Kent water companies are awaiting decisions on similar applications.
An independent inspector heard objections at a public hearing but his report said that without the non-essential use ban there was a "substantial threat" to water supplies in the Sutton and East Surrey area.
Mr Pearson said: "The government takes very seriously the well-being of the public and the need to minimise the risk of more serious restrictions if the drought continues."
In deciding which uses to ban, Mr Pearson said he expected the company to maximise water savings and minimise the economic and social impacts on people and small businesses which rely on water for their livelihood.
"I also expect to see continuing efforts by all water companies to improve their performance on leakage," he said.
"The drought in the South East remains serious.
"There have been misleading reports suggesting that recent rainfall has somehow solved the problem.
"It hasn't. River flows and groundwater levels are worryingly low."
The drought order coincided with an Environment Agency report warning of another hot, dry summer, and possibly the most serious drought in a century - underlining the risk of standpipes being brought in.
And Dame Yve Buckland, chair of CCWater, said it recognised the need for the drought order to minimise the risk of having to use standpipes later in the summer.
"However, we urge the company not to be too over-zealous in applying its powers," she said.
"Meanwhile, both household and business consumers should do all they can to save water."
Sutton and East Surrey Water said the new restrictions would apply from 27 May and would extend the current ban on domestic hosepipes and sprinklers.
Restrictions will be phased in with large uses of water banned from 27 May and other permitted restrictions being introduced later depending on the demand for water in coming weeks.
Operations Director Mike Hegarty said: "The water resource position remains essentially unchanged following disappointing rainfall in the past two months.
"The immediate priority now is to ensure that available resources are able to meet essential demand this summer and autumn.
"The company will today be issuing the public notices which are necessary in order to implement further restrictions."
He said restrictions applied to commercial uses such as watering golf courses and public uses such as watering parks and filling swimming pools.