Officials in Beijing have warned that a third of China's rural population - an estimated 360m people - lack access to safe drinking water.
They also said that more than 70% of China's rivers and lakes were polluted.
The vice minister for water resources, Zhai Haohui, told a symposium on water management that the provision of clean drinking water should be a priority.
This is yet another sign that China is struggling to deal with the impact of its breakneck economic development.
China's waterways are dying, and its rivers are running black from industrial effluent and untreated sewage.
The China Daily newspaper said that about two million people had suffered diseases caused by drinking water with high arsenic content, including cancer.
In the nation's cities, the situation is just as dire. There, ground water is the major source of drinking water.
Yet in one recent survey, 95% of the samples tested were polluted, some with sewage.
An official from the environmental watchdog openly blamed the crisis on improper policies and poor government administration.
But decades of rampant economic development have taken their toll on China's environment.
Those now tasked with cleaning up face opposition from polluting industries and local governments.
The current leadership has stressed the need to conserve the environment, but these latest figures show just how much damage has already been done.
By Louisa Lim
BBC News, Beijing