Accrington residents could be faced with a hose pipe ban as early as next week after reservoir water levels continue to fall.
And with no rain in sight water operator United Utilities have now applied to the Environment Agency for a drought permit to access to water in the Lake District in order to ease the problem.
John Sanders, United Utilities water regulation and strategy manager, said: "It's been an unprecedented period of dry weather since December 2009, and we need to take action now so we can tap into available water resources if the dry weather continues."
Dean Clough Reservoir in Great Harwood is just one of the reservoirs Hyndburn residents use to draw water which has seen levels plummet.
United Utilities is also encouraging customers to play their part by using water wisely – which includes the possibility of introducing a hose pipe ban.
Mr Sanders added: "Now, more than ever we need people to use water wisely. We’re monitoring the situation day by day, but if we don’t have any significant rainfall by the end of this month we will need a hosepipe ban to help conserve essential supplies.
"Of course we need to balance the needs of our customers with the needs of the environment. By using water wisely we can all help to maintain supplies and keep rivers flowing.
"At the start of December, our reservoirs were 96 per cent full, but because of the low rainfall since then, they are now well down for the time of year. We have taken early action to move water around the region to even out supplies, and we are also bringing groundwater reserves into use.
The Environment Agency said it is working with United Utilities to ensure that public water supplies and other essential uses of water are maintained
Bill Darbyshire, drought manager at the Environment Agency, said: "We are working to balance the water needs of people, businesses and the environment in the North West.
"We are working closely with United Utilities to make sure they are doing everything they can to secure water supplies, manage customer demand and tackle leakage."