* Severe drought expected in spring, summer
* Seven water companies impose restrictions
LONDON, March 12 (Reuters) - Drought could spread to more regions of Britain if dry weather continues this spring, the UK's Environment Agency warned on Monday, prompting seven water companies to impose water restrictions on their customers.
A large part of England is already in drought after extremely low rainfall for two winters, which has affected much of the southeast, including London, and East Anglia.
Drought could spread as far north as East Yorkshire and to regions further west if dry weather continued this spring, the Environment Agency said in a report published on Monday.
Rivers, canals and reservoirs are running low after the second dry winter in a row, with some areas receiving less than 70 percent of normal amounts.
The agency does not expect low groundwater levels to be replenished which will dry soils out further and lead to low river levels and the drying of wetlands.
There needs to be well-above-average rainfall this month and next to ensure a full winter-time recovery of water resources in southern, eastern and part of central England, the report said.
The UK's Met Office, however, predicts the next three months will be warmer than average and the possibility of heavy rainfall is slim.
"The chances of receiving the necessary amounts of rain in these regions are very low in the forecast," the Environment Agency said. "We are therefore anticipating a severe drought in spring and summer 2012."
The agency called on water companies to follow their drought plans, show they are reducing leakage from networks, consider sharing water with neighbouring companies and encourage customers to use water wisely.
Anglian Water, Southern Water, South East Water, Sutton and East Surrey Water, Thames Water, Veolia Central Water and Veolia South East will introduce a temporary hosepipe ban on April 5, the firms said on Monday.
If dry weather continues, there may be even more restrictions imposed this month, the Environment Agency warned.
Drought will also impact food production. Fruit, vegetable and salad growers could suffer in east, central and southeast England and there will be less drinking water available for livestock, especially housed pigs and poultry.
Grass quality will continue to worsen, raising costs for farmers for re-seeding or resulting in reduced livestock numbers.
Drought also poses a risk to the environment and wildlife, with the possibility of plant and animal species being lost at least temporarily from freshwater and wetland sites, increased river pollution, and a greater risk of woodland fires.
Boating on the Oxford and Grand Union Canal could also be restricted during the main boating season - April to October - and the levels of the Kennet and Avon Canal could be at risk, the agency said.
However, London's Olympic Games in July and August should not be affected by a drought.