TZEMAH, ISRAEL -- On a warm, sunny day, the Sea of Galilee stretches north from here in a tranquil carpet of crystal blue, dotted with the fishing boats that have worked its fresh waters since biblical times. Along the stony edges, however, there are alarming signs of trouble in this great lake of the Holy Land.

Since Nov. 26, the aqueduct that normally carries water to thousands of consumers from the sea, called Lake Kinneret by Israelis, has been dry, shut down by order of the water commissioner. Spawning grounds of fish and once-crowded beaches are parched and bare. Near this southern edge of the lake, a rocky island has appeared, making obvious even to tourists that something is awry.

Simply put, the waters of the Kinneret, where the Bible says St. Peter fished and Jesus walked, are drying up, endangering the delicate ecological balance of the lake -- which lies 696 feet below sea level -- and leaving Israel on the brink of the most serious water crisis in its history.

After two seasons of drought and years of overuse by a thirsty and growing country, the Kinneret is at the lowest level ever recorded, and only barely above the "red line" below which scientists say its waters could be irrevocably damaged by salinization.

As a result, Israel is being forced to face the issue of its steadily worsening water shortage, a problem its politicians and public have largely ignored through years of growing use and shrinking supplies. As in most of the rest of the Middle East, water is now being described in Israel as one of the crucial challenges of the coming decade, a force that could compel far-reaching changes in the country's economy and lifestyle, or even plunge it into war with its neighbors.

"If the shortage of water in Israel becomes stronger and stronger, and we can't solve it by peaceful means, then it will have to be solved by war," said Zvi Ortenberg, chairman of the Lake Kinneret Authority here. "What other choice is there? Water is like blood -- you can't live without it."

The shutdown of pumping from the Kinneret has left Israel without access to a source that usually provides one-third of its water. Officials had hoped that with the arrival of the rainy winter season, the country could get by on its other sources, even though some of these are also greatly reduced.

But the first six weeks of the rainy season have been the driest in 70 years and discouraged experts say that if the entire winter remains dry -- following the warm, relentlessly sunny weather that stretched through November in the Galilee -- drastic water cutbacks may have to be imposed nationwide in April, as the six-month-long dry season begins.

Agriculture Minister Rafel Eitan announced plans last week for potentially severe cutbacks if the situation does not improve.

"Now we are in a situation where if we don't have rain very fast, we will be in a position where we will have to make stark choices," said Shmuel Kantor, the chief engineer of the national water company, Mekorot. "Either we will have to cut the water supply to this or that sector of the population, or we will have to go below the safety limits we have set for ourselves in the Kinneret and in our underground aquifers."

Kantor and other water company officials blame the crunch largely on a two-year drought that drastically reduced the flow of fresh water into the Kinneret as well as the two big aquifers that lie under Israel's coastal strip and the adjacent Israeli-occupied West Bank. But Ortenberg, whose agency is charged with protecting the Kinneret, and other outside experts say Israel has also been overpumping water from its reservoirs for nearly a decade, producing a cumulative deficit in them of up to 2 billion cubic meters -- an amount equal to a year's consumption.

"For years we were asleep on this issue," Ortenberg said. "We used too much water and we didn't prepare ourselves to cover this deficit." Now, with no new man-made sources of water in sight, Israel is dependent on nature: Experts say it would take at least two, and more likely three or more, consecutive years of unusually heavy rain to refill the reservoirs, a development they concede is unlikely.

Meanwhile, officials expect that up to 1 million immigrants could pour into Israel in the next several years, adding another 10 percent to the country's demand for water. Water company officials, scrambling to cope with the expected surge, have asked for a near-tripling of their $35 million investment budget next year to build the new pipes and pumping stations they say will be necessary. But no one is sure where the water will come from.

That means that a confrontation may be looming between Israel's growing urban population and its farmers, the kibbutz and moshav movements that pioneered Jewish settlement of the country and continue to benefit from the nation's emotional link to agriculture. Although farms provide just 6 percent of Israel's employment and less than 10 percent of its exports and overall income, they receive about 60 percent of the country's water supply, which they use to irrigate half of their planted acreage.

The government also subsidizes water for agriculture, reducing its price by about one-third, so that even crops requiring intensive irrigation, such as cotton, will be profitable to the kibbutz farmers. While the farms have begun using recycled waste water for some crops in recent years, they still use twice as much potable water for irrigation as is consumed by the 4.7 million people living in Israel.

The farmers' vise-like grip on water supplies is bureaucratically built-in. Israeli law gives control of the country's water resources to the Agriculture Ministry, and farmers form a majority on all the boards and panels that are supposed to advise on water use and conservation.

Last April, with the shortage already growing, the government cut the allotment of water to farming by 17 percent. But despite the now-imminent crisis, water company officials say they are planning to give the farms a 2 percent increase in supplies next year. And bureaucrats and politicians alike insist that Israel cannot give up its tradition of intensive, irrigated farming.

"Israel without agriculture is not Israel," said Ortenburg, himself a member of a kibbutz. "It's not possible."

Rather than contemplate the restructuring of agriculture, government policy-makers are pushing elaborate and costly new projects to increase the water supply. Agriculture Minister Eitan, a former general and kibbutz member, is trying to promote construction of three huge sea water desalinization plants over the next decade, which he says could serve Jordan and the Egyptian Sinai as well as Israel.

Eitan has a simple answer for how the staggering cost of building desalinization plants, which he estimates at up to $8 billion, could be met: the United States, Japan and the European Community, he says, should hand over the money.

"Instead of wasting time and money on futile peace talks and armaments," Eitan said in an interview, "such an investment would serve to defuse regional tensions and remove one of the threats of war."

Kantor, the water company engineer, said water supplies also could be increased by stepping up the recycling of water from urban use to agriculture. Currently only half of Israel's urban waste water is recycled; most of the sewage of Jerusalem, a city of 500,000, is simply dumped into river beds. Kantor said a Jerusalem recycling plant is still on the drawing boards and such projects will take many years to complete.

In the end, Kantor conceded, changes in agriculture may be necessary in the next several years, even if rains are good. "The problem is not water, it's the whole economic situation of the country," he said. "We have to decide whether to make farming more profitable or not."

Ortenberg is worried about another possibility: that politicians unwilling to force cutbacks in water use will demand further pumping from the Kinneret.

"Our worry is what will happen in April and May, when the whole country is suffering from a shortage of water and there is no place to take it from but the Kinneret," he said. "Then maybe the hand of the water commission will not be strong enough to stay the hand of the government, and we will pump below the red line.

"The problem is, if something happens to the lake, you can't repair it," Ortenberg said. "Once the water is ruined through salinization or some other process, we will never be able to use it again."