Melbourne could be facing water-restrictions from low-rainfall, a dry summer, and high water-use

The city's water storage has recorded the steepest annual decline in more than a decade.

Individual usage is at 169 litres a day, up from 163 the previous year, and above the recommended 150 litres per person.

Yarra Valley Water Assets Services General Manager Bridie Fennessey, says residents must apply water conservatively, or risk a water-limit.

She says they need shorter showers, full loads of laundry and dish-washers.