"The situation is serious," said Jeremy Pelczer, Chief Executive of Thames Water.

"The drought across the southeast has now gone on for so long that we have to be prudent and introduce measures that will make best use of limited supplies and help protect the environment."

Southeast England is suffering its most serious drought in 100 years with little rain having fallen since November 2004.

At the start of the month, Folkestone and Dover Water Services, which supplies 165,000 people, said it would be introducing compulsory metering for its customers in Kent because of the severe shortage.

The Environment Agency welcomed the Thames Water ban, saying companies had to take action to address the current water shortages.

However the German-owned company has been criticised for the state of its network and admits that about a third of the water supplied through London's 20,000 miles of pipes is lost because of leaks.

"There is a real danger that the public will not heed official advice to stop wasting water if they continue to see the water company as the biggest culprit," said Darren Johnson, chairman of the London Assembly's Environment Committee.

Thames Water said it would be spending half a million pounds a day until 2010 on reducing leaks, with 1,000 staff working across the capital to fix 200 problems every day.

"We are doing everything we can to increase supplies and save water ourselves," Pelczer said. "We remain absolutely committed to reducing leakage as rapidly as possible."

However he warned that if the drought continued, further measures could be taken.

"By taking this step now, we will lessen the likelihood of more stringent restrictions later - but much still depends on how much rainfall we receive in the coming weeks," he said.