It issued the call while launching consultation, with the government, on the country's first eco-quarter. Once its location in the Thames Gateway has been agreed, the 2,000-home area will be used as a test bed for technologies and initiatives that could help to tackle climate change.
An agency study has found that water neutrality - where total water use after development does not exceed previous levels - has economic and environmental benefits. For every £1 invested, homes and businesses benefit from £1.40 in reduced energy and water use, according to the research.
"Water efficiency has been the poor relation of energy efficiency and does not get enough attention. About 23 per cent of emissions from homes come from heating water and it is often easier to tackle," said the agency's head of sustainable communities Julie Foley.
She added: "Water neutrality uses existing technology and adds less than one per cent to the cost of a development. We hope that by including it in the eco-quarter, local authorities will see that it works and will replicate it in other developments around the country."
The consultation, seeking views from local authorities, developers, residents and delivery bodies in the Thames Gateway, closes in January.
The consultation is available at PlanningResource.co.uk/doc