Nearly 35,000 households could have woken up with no water today after a pump failed yesterday.
Severn Trent said it was vital that people in the Rugby area of Warwickshire made "every effort" to conserve supplies by turning off hosepipes and sprinklers, and abandoning plans to use paddling pools.
A company spokeswoman said water levels at Barby storage reservoir - which serves the CV21, CV22 and CV23 postcodes - were low after a power cut knocked out a pump at the nearby Draycote basin, which supplies Barby.
The spokeswoman said: "Because we have got high demand at the moment, people were taking water out of that reservoir and we were not able to fill it back up.
"Levels are a lot lower than we would like at this time of year and unless customers in the Rugby area conserve water we could be in a situation as we head into the evening where we have got no water left in that reservoir for supply.
"The situation means it is in customers' interests not to use their water unless absolutely necessary.
"We are monitoring the situation very closely."