Chen Lui, addressing a conference in Guilin, said the first steps are controlling waste and tightening management of water resources.
The ministry said water consumption dipped 10 percent in 2008 from 2007. But officials also said two-thirds of the cities have water shortages and 200 million people living in rural areas -- around one-fifth of the population -- do not have adequate supplies of drinking water.
China is suffering its worst drought in 50 years, with almost 5 million people and more than 2 million head of livestock affected.
"We must take strict measures to preserve water resources in the face of the severe lack of water worsened by factors such as overuse, pollution and drought," Chen said.