John Howard, the Australian prime minister, yesterday announced the most ambitious attempt yet to overhaul the drought-ridden country's inefficient water management system and improve his environmental credentials ahead of elections later this year.

But the success of the A$10bn (US$7.8bn, €6bn, £4bn) plan could hinge on whether Mr Howard can persuade the six state governments, which dictate water policy, to cede most of that power to the federal government - including management of the Murray-Darling basin, Australia's most important water resource.