The Department for Environment, Food and Rural Affairs (DEFRA) confirmed that parts of the South West, parts of southern and central England, and the East of England will be moved intro drought status.
The areas affected are Devon and Cornwall, Solent and South Downs, Kent and south London, Herts and north London, East Anglia, Thames, Lincolnshire and Northamptonshire and East Midlands.
Restrictions will vary based on each local water company, but are likely to include hosepipe bans being slapped on millions more people, canals being closed to boats, and extra measures to protect wildlife.
The most extreme measures could include a ban on non-essential water being used, and some of the restrictions could last into next year.
The Met Office revealed that the UK saw just 56 percent (46.3mm) of its average rainfall last month, making it the driest July in over 20 years and the same for England since 1935.
Regions in the south and east were particularly impacted, with just 17 percent of its average rainfall, a figure that hasn't been recorded since 1836.
The drought announcement was made today (12 August) after a meeting held by the National Drought Group.
Senior decision makers from the Environment Agency, water companies and other groups discussed the current situation and laid out plans to protect water resources in the coming weeks.
Stuart Colville, the director of policy at Water UK, previously told BBC Breakfast that announcing a drought would be the 'right decision given some of the pressure on the environment that we’re seeing at the moment'.
The ongoing dry conditions were exacerbated by last month's record-breaking temperatures, which have seen the water levels of rivers, reservoirs and soil decrease.
Already a number of organisations have implemented hosepipe bans in England, including Yorkshire Water and South East Water.
Speaking about the decision, Yorkshire Water’s director of water Neil Dewis said: "Parts of Yorkshire have seen the lowest rainfall since our records began more than 130 years ago.
"The hot, dry, weather means that Yorkshire’s rivers are running low and our reservoirs are around 20 percent lower than we would expect for this time of year.
"We’ve been doing everything we can to avoid putting in restrictions, but unfortunately they’re now necessary as part of our drought planning.
"We’ve been monitoring reservoir levels, weather forecasts and other environmental indicators closely to determine whether we might need to put further measures in place.
"As we’ve now reached that trigger point, we need to make sure that we have enough supply for the essential needs of people across the region this year and next, as well as making sure we’re able to protect our local environment by limiting the amount of water we have to draw from the rivers.
"Our decision to introduce a hosepipe ban is based on the risk that water stocks continue to fall in the coming weeks and the need to be cautious about clean water supplies and long-term river health."
Although the company's hosepipe ban comes into effect on 26 August, it's asking customers to limit their use to help save on water now.
Meanwhile, South East Water's ban comes into play on 12 August within its Kent and Sussex supply area until further notice.
The firm said it had been producing an additional '120 million litres of water a day' for its customers due to the ongoing dry conditions.
It said in a statement: "We are taking this step to ensure we have enough water for both essential use and to protect the environment.
"This will enable us to also reduce the amount of water we need to take from already stressed local water sources."