Deputy Prime Minister John Prescott has been blamed for plans which could lead to Sussex households drinking water from the English Channel.
Last week, The Argus revealed South East Water hoped to build a trial desalination plant in Newhaven.
Lewes MP Norman Baker said Mr Prescott's plans for thousands of new homes in the region had forced the water company to take the drastic step.
Mr Baker, Liberal Democrat environment spokesman, questioned whether water supplies in Sussex and Surrey could cope with all the development.
He told the House of Commons: "Pressure on water resources is enormous.
"Regional policies have led to thousands of houses being earmarked for demolition in the north while more housing is being built on scarce greenfield sites in the south-east."
Mr Prescott insisted the Government was working with the water industry and the Environment Agency to improve the management and conservation of current water supplies.
He said: "The Environment Agency is undertaking work for the South East England Regional Assembly on water resources across the south-east.
"We have spent a considerable amount of time on the problem.
"In 1997, I set up the water conference which reduced leakages by 20 per cent, saving as much water as that of six million households.
"That was a considerable saving but we had to go further."
Desalination, which involves removing salt from sea water, used to be a costly, energy-intensive process but new techniques have made it more commercially viable.
Mr Baker has expressed concern about the environmental impact of a large-scale desalination plant, both because of the power needed to run the process and the potentially-harmful by-products.
But he said he appreciated South East Water's need to find new water sources.
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