The Commonwealth Scientific and Industrial Research Organisation warns that if residents do not cut water consumption by more than 50 per cent in Sydney over the next 20 years, the city will become unsustainable.
The report also warns that temperatures could rise 5C above the predicted global average, which would leave the city facing an almost permanent state of drought.
By the year 2070, if climate change goes unchecked, the city is in threat of severe droughts nine out of every 10 years, a dramatic rise in the number of bush fires, and freak storm surges which could devastate the coastline.
Scientists predict that rainfall will fall by 40 per cent by 2070, not only creating a massive water crisis, but producing double the number of bush fires.
Heat-related deaths could soar from a current average of 176 a year to 1,300.
Climate change issues will become a top priority for Australians, as the change is predicted to destabilise the Asia-Pacific region, exacerbate food, water and energy shortages and threaten Australia's security.
The government of New South Wales, which commissioned the report, has been alarmed by its findings.
Along with America, Australia has refused to sign the Kyoto Protocol, the only two major industrialised nations to do so.
