Water companies are in a standoff with the government over hosepipe bans as they resist bringing in restrictions despite growing concerns about rivers running dry and the prospect of drought in England and Wales.

The decision to restrict water usage is made by individual water companies, which are advised by the government and charities as part of the National Drought Group.

Government sources said they have urged more water companies to implement a ban on excessive water use, such as hosepipes for gardening and washing the car, as well as filling paddling pools.

Last month was the driest July in England for more than 100 years and some areas have had their driest summer on record.

Two water companies – Southern Water and South East Water – have announced hosepipe bans for millions of customers, with Thames Water and Welsh Water warning restrictions could be imposed.

South East Water said on Wednesday that it had “no choice” but to restrict water use for 3 million households from 12 August, citing demand this summer breaking “all previous records” during extremely dry conditions.

But other companies, even in drier areas, have held firm. Those involved in drought discussions say companies would rather wait until the last minute, when rivers are running dry, rather than irritate customers by putting bans in place early.

Mark Lloyd, the chief executive of the Rivers Trust, said: “I made the point at the National Drought Group that every year we get to this position and at the last possible limit, when the rivers are at their lowest, we get discussion of temporary use bans.”

He said the situation can be made worse before it gets better because, when people fear an impending ban, many rush to use water and put extra stress on the system.

“Announcing it at the last minute also causes everyone to rush to wash their cars and fill their paddling pools, wash the dog, and causes an increase in demand before the ban comes in,” he said.

“This should happen before the rivers come to a desperate condition and there’s not enough water for wildlife.”

A fear of a customer backlash could be preventing companies from acting, he said. “It is unpopular – gardeners complain – and there’s an issue of trust as well – people are pointing out there’s a lot of leakage from water company pipes and people say: ‘Well, you fix your leaks and I’ll stop using my hosepipe,’” Lloyd added.

“There is a breakdown of trust between the public and the water companies, particularly with the sewage spills and everything.”