Tens of thousands of new homes face being delayed or scrapped because phosphate, found in animal and human waste, is getting into rivers and affecting water quality.
Last January new targets for phosphate pollution were brought in, and are estimated to have affected 100,000 new-build homes in England and Wales.
Natural England said phosphate pollution is causing "serious damage" to rivers and wetlands – and the species that live in them – and made £100,000 available for each affected river catchment.
The pollution is a problem partly caused by demand for cheap food.
High levels of phosphate and other nutrients in rivers can lead to algal blooms and, ultimately, the loss of many species that make rivers their home, including fish, birds, invertebrates and plants that are vital to the river ecosystem.
Currently more than half of waterbodies fail against the tighter targets, and planning authorities are being asked to take more action to avoid further deterioration of the environment. It means any proposals for development within river catchments – in particular those that will generate increased volume or concentration of wastewater – must now prove that the design will not contribute to increased phosphate levels.