After years of drought Lake Mead, the main source of fresh water for the holiday hotspot, has hit the lowest level ever and Sin City is now facing its biggest crisis.

Athe Venetian hotel gondoliers punt tourists up and down a fake Grand Canal.

There are six-foot waves in the sandy-bottomed pool of the Mandalay Bay, while the pool parties at the water complex of the Hard Rock Hotel with its underwater sound system are a legendary summer feature.

Even more legendary are the fountains: the one at Caesars Palace, which Evel Knievel once tried to leap on a motorbike and ended up in a coma, and the musical ones on the eight-acre lake at the Bellagio that reach 500ft and are a tourist draw in their own right Welcome to Las Vegas, the self-styled but undisputed entertainment capital of the world.

Home to 15 of the world's 25 largest hotels it boasts 125,000 rooms for visitors, every one of them with an obligatory en-suite bathroom. 

The city may sit in the Mojave Desert and get just four inches of rain a year but this is a place where everything is done to excess.

The idea of cutting back on anything, least of all water, sounds unthinkable.

But take a trip 25 miles southeast to Lake Mead, the massive reservoir created when the Hoover Dam was built across the Colorado River, and you get a striking visual wake-up call.

All around its 760 miles of rocky shoreline is a clearly defined line that locals call the "bathtub ring".

Above it the rocks are brown and jagged but below they are shiny white. This is where the calcium in the water has stained the rocks - and the widening band of white is a powerful sign of how fast the level is dropping.

The lake, which supplies 90 per cent of the water to the two million residents of Las Vegas and its 43 million annual visitors, has been reduced by drought to the lowest level since it was filled in 1937 and is now at 39 per cent capacity. The surface reached a record high of 1,225ft above sea level in 1983 but is now at about 1,080ft. If the level drops below 1,050ft one of the two intakes that feed water to the city will become useless. Another 50ft and the other one would fail.

With the water level dropping by about a foot a week you can see why Professor Tim Barnett, climate scientist at the Scripps Institution of Oceanography in California, recently warned: "The situation is as bad as you can imagine. It's going to be screwed - and relatively quickly.

"Unless it can find a way to get more water from somewhere, Las Vegas is out of business."

Most of the water from the Colorado River, which runs down to a trickle where it used to meet the Gulf of California, actually goes to agriculture.

Seven states share its waters and under an accord struck at a time when Las Vegas was still tiny, Nevada gets just two per cent.

Nowadays the city is expanding at a massive rate and the population has more than quadrupled since 1980. But the reason Lake Mead is so low is that for the past 12 years the south-west of the United States has been suffering one of its periodic droughts.

Recorded in the area for some 1,200 years these are a result of reduced snowmelt from the Colorado Rockies. The current drought is made worse by global warming: higher air temperatures make the lake water evaporate faster.

But meteorologist Mike Tsolinas, who writes about Las Vegas weather at miketsolinas.com, says it's wrong to say Sin City is drying out. "Fortunately the Las Vegas Valley Water District is way ahead of the curve on this," he says.

"At 1,000ft Lake Mead would not be able to provide any water to Las Vegas because our intake valves would be pumping air. However a new project at 875ft is already twothirds done. By the time that happens, should it ever, Las Vegas will still have water.

"So the city will not run dry soon. We have at least enough water for everyone to come play in for another 30 years or so."

Water consumption in the city itself is actually falling, despite the soaring population. It may come as a surprise considering its air of conspicuous excess but Las Vegas has had no choice but to become one of the most eco-conscious places in the US.

One misconception is the Bellagio fountains, which seem like such a ruinous waste of water but aren't fed from Lake Mead.The display is supplied by groundwater from an aquifer that is high in salt content and so would not be drinkable.

Much more significant for conservation is that every drop of water going down a drain in a hotel bathroom or toilet is treated to near drinking-water standard and sent back to Lake Mead.

"We have been way ahead of the curve here in cultivating an ethic of conservation, providing people with the incentives to conserve, and we've been doing that for more than a decade now," says Bronson Mack of the Southern Nevada Water Authority.

"Compared to 2002, which is really when the drought started, our water consumption has dropped by 32 billion gallons yet our population has increased by almost half a million.

"In other words our water consumption has been cut by one third but our population increased by a quarter."

The real conservation effort is aimed at water used outdoors, which can only be used once.

Mack says the conservation argument has largely been won among locals, who get rebates from pulling up turf from their gardens. The bigger challenge is the tens of thousands of migrants arriving from America's chillier corners at the end of every hard winter.

"A lot of them are pensioners sick of shovelling snow and we need to help them understand that they are now living in a desert and will have to adapt," says Mack.

"They won't be able to have grass in their front yard - they will have to have something more water-smart. But that message has been more easily received over the past five years or so, as people have become more aware of the drought and more attuned to the value of water."

The anti-green excess that can't be explained away are the wealthy enclaves arranged around manmade lakes such as the 320-acre Lake Las Vegas, whose residents include Celine Dion and which require regular topping up from Lake Mead.

These communities were planned in the late 1970s and early 1980s before anyone realised the extent of the problem and nowadays local development codes would no longer permit them. Since nobody is prepared to let the existing lakes dry out the most to hope for is the development of new technologies to prevent evaporation.

Otherwise Mack is upbeat. "In Las Vegas we had to change the culture because we were the fastest-growing community in the US for many consecutive years and we needed to take adaptive action," he says.

"We have taken account of our projected population growth in our 50-year water resource plan and so far so good. The community has been outstanding in its response and I am of the firm belief that Las Vegas is not going to dry up and blow away."