"I think it's fair to say that we came out of it with an even more sober assessment, or understanding, of the challenge," Mr Howard said.
The meeting included Victorian Premier Steve Bracks, NSW Premier Morris Iemma, South Australian Premier Mike Rann and acting Queensland Premier Anna Bligh.
The Prime Minister also announced that a working group of state and federal public servants will report back by December 15 on the plans to secure water supplies during the 2007-08 water year, which commences on June 1 next year.
Mr Howard said the federal government had agreed to speed up the implementation of proposals under the National Water Initiative, with permanent interstate water trading to begin in the southern states on January 1, 2007.
“We've asked CSIRO to report progressively by the end of next year on sustainable yields of surface and groundwater systems within the (Murray-Darling) basin," Mr Howard said.
"The commonwealth will speedily process the projects presented to us by the states for assessment under our national water fund."
Mr Howard said water and climate change issues were already on the agenda for the next Council of Australian Governments (COAG) meeting next April.
"This country does face the worst drought in living memory," he said.
"It has already affected many of our farmers. The commonwealth stands ready to continue to help our farmers."
‘One in 1,000 year drought’
South Australian Premier Mike Rann said the Murray-Darling commissioner told the meeting Australia was now facing a one in 1,000 year drought.
"We were told at the meeting by the Murray-Darling commissioner that we now face, not a one in 100 year drought, but a one in 1,000 year drought," he said.
"So we are into uncharted territory.
"That means we all have to work together. The water in the River Murray does not belong to any one state. It is a resource for the nation and therefore has to be managed collaboratively rather than independently.
"What we are seeing with this drought is a frightening glimpse of the future with global warming."
Mr Rann said the SA government would immediately begin planning work on a weir at Wellington, although it was hoped that would never need to be used.
Cubbie Station
Mr Howard said the issue of the Queensland cotton producer Cubbie Station had been discussed, but that it was a diversion.
He said Queensland took 731 gigalitres of water from the system, of which Cubbie accounted for about 25 per cent. In contrast NSW took about 7,300 gigalitres.
"You can pretty quickly see that whilst it might be an attractive subject for media focus and debate and interest, the idea that Cubbie Station is the silver bullet is nonsense," he said.
"Whether you do something about Cubbie Station and whether it's a good idea to, in a country as arid as Australia, to have intensive cotton farming is another issue and I don't offer a view on it.
"We are missing the point and getting diverted by thinking that doing something about Cubbie will solve a problem. It won't."