Water companies would face targets to help customers save more than 23 million litres of water a day (Ml/d), under proposals published by Ofwat.
George Day, Ofwat's Director of Network Regulation, said:
"We have to use water more carefully and cut waste if we are to continue to enjoy safe, reliable water supplies.
"The new approach to water efficiency targets we are proposing will be challenging for companies but help to reduce wasteful use of water. This should mean lower costs, lower customer bills and good news for the environment."