Howard and his close ally, US President George W. Bush, lead the only two developed countries that have refused to ratify the UN protocol aimed at reducing the emission of greenhouse gases blamed for climate change.

But in the face of the worst drought in more than a century and opinion polls showing increasing numbers of Australians are concerned about global warming, Howard has begun scrambling to counter criticism of his lack of action.

Using the high-profile annual address to the press club on the eve of Australia Day, Howard put climate change firmly on the agenda ahead of elections due by the end of the year, saying Australia's water use was unsustainable.

"In a protracted drought and with the prospect of long-term climate change we need radical and permanent change," he said.

"I regard myself as a climate-change realist. That means looking at the evidence as it emerges and responding with policies that preserve Australia's competitiveness and play to her strengths."

He announced a 10-billion (7.8-billion US) dollar plan aimed at protecting dwindling water supplies in the vast isolated island, where an already parched centre has people and agriculture clinging to the edges.

The move comes two months after the government's top science body warned in a special report that global warming could force temperatures in parts of Australia up by more than six degrees Celsius by 2070.

Annual rainfall in vital agricultural regions could drop by 40 percent over the same period, turning farms into dustbowls, the Commonwealth Scientific and Research Organisation (CSIRO) said.

A key element of Howard's 10-point plan to better manage the nation's lifeblood involves a three-billion-dollar federal government takeover of the country's biggest river system, the Murray-Darling Basin, from the four states currently controlling it.

"This is our great opportunity to fix a great national problem; it can only be solved if we surmount our parochial differences -- it can only be realised if, above all, we think as we should, on the eve of Australia Day, overwhelmingly as Australians," he said.

The plan also includes pumping six billion dollars into the biggest modernisation of irrigation infrastructure in Australia's history and 1.5 billion dollars into water-saving measures for farmers.

In another sign of election battle lines being drawn over climate change, Howard earlier in the week promoted a star recruit to his Liberal Party's parliamentary ranks to the environment portfolio.

Former high-profile advocate, businessman and merchant banker Malcolm Turnbull will take on the opposition Labor Party's own star performer in the environment role -- former rock star and Midnight Oil frontman Peter Garrett.

The Australian Greens party welcomed the water plan, saying Howard was "reluctantly recognising the impacts of climate change and acknowledging that a long-term approach is needed".

"It is a pity that it has taken an election year and a battering in the polls to force his hand, and a shame this could not have happened much sooner," the Greens said in a statement.

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