The summer drought has generated more than 100 reports of serious effects on wildlife ranging from distressed fish and dead ducks to toxic algal blooms.
Water courses in England and Wales are running dry, rivers are silting up and trees are shedding their leaves far earlier than normal because of the dry weather.
As rivers dry up, low levels of water and oxygen have caused fish to gasp for air, turned ponds green and stranded several types of aquatic insects, according to the Environment Agency (EA).
After two dry winters and a hot, dry summer, the environmental impacts of possibly the worst drought in 100 years are beginning to be seen across the country, said David King, the EA's director of water management.
"This drought is not only affecting people in the way we use water; we've seen 21 months of below-average rain and the environment is suffering too," he said. "We're seeing ponds and rivers drying up, fish becoming stranded and algal blooms. At first, we couldn't see the impact of the drought around us, as the real problems were low groundwater levels in the South-east.
"But the continued lack of rainfall, low water levels and recent high temperatures have put pressure on the environment right across England and Wales."
The EA warned that if the drought conditions continued into a third winter, the effects will be even more dramatic. "We respond immediately to reports of environmental incidents increasing oxygen levels in water and monitoring water levels," said Dr King. "But sometimes we can all take it for granted that the water that comes out of our taps ultimately comes from somewhere in our environment."
A separate investigation into the drought by the Royal Society for the Protection of Birds (RSPB) said that a profligate attitude to water had made matters worse. It said that huge volumes of water were being squandered through leaking pipes and water-greedy housing.
Low groundwater levels and slow-moving rivers have led to the concentration of pollutants from farmland and the explosion of algal blooms caused by an increase in nitrate levels. Fish were being denied the vital backwaters and shallows they use for breeding and, the RSPB report warned, many rivers were now so dry that, without intervention, some were likely to be emptied of fish. "While we may not be able to prevent natural drought, we can reduce its impact on wildlife and the environment by transforming the way we manage water," said Phil Burston, the RSPB's water policy officer and author of the report.
The RSPB called for an increase in the re-use and recycling of water, better water efficiency for new homes, stringent targets to reduce leaks, an end to land drainage and more money to help farmers manage their land in a water-sensitive way.
"Managing water in this sane way could prevent the need for costly and environmentally damaging new infrastructure and reduce the overall environmental impact of supplying us with water," Mr Burston said.
"A world that treats water in this holistic way will be a more drought-resistant world."