The proposal — which would bolster Atlanta's drinking supply at the expense of users downstream — was announced Thursday after the governors of the three states met with Interior Secretary Dirk Kempthorne and other administration officials.
It still must win approval from the federal Fish and Wildlife Service because of the potential impact on several protected species of mussels and sturgeon that live downstream. Officials said the agency would issue an expedited biological opinion on the change within two weeks.
"I'm grateful for the relief," said Georgia Gov. Sonny Perdue.
Perdue has criticized the federal government for continuing what he calls excessive water releases from reservoirs such as Lake Lanier, Atlanta's main water supply, even as the drought has shrunk it to record lows.
But Perdue and other Georgia leaders have been criticized by neighboring states and environmentalists who say Georgia has failed to plan for its growth.
Alabama Gov. Bob Riley and Florida Gov. Charlie Crist previously had fought Georgia's effort to keep more water, arguing that its demands were unreasonable and that reducing river flows could cripple their economies.
On Thursday, they accepted the recommendation, but only as part of continuing negotiations.
"In extreme drought we have to take extreme measures," Riley said. "I think we'll be fine."
The three states have been locked in a legal battle over water rights for the better part of two decades. But the fight has intensified in recent weeks as a record drought has taken over much of the region. According to the National Drought Mitigation Center, almost a third of the Southeast is covered by an exceptional drought, the worst category.
The dispute centers on how much water the Corps of Engineers holds back in federal reservoirs near the head of two river basins in north Georgia that flow south into Florida and Alabama.
The fast-growing Atlanta region relies on the lakes for drinking water. But power plants in Florida and Alabama depend on healthy flows in the rivers, as do farms, commercial fisheries, industrial users and municipalities. The corps also is required to release adequate flows to ensure habitats for species protected by the Endangered Species Act.
Under Thursday's agreement, the corps would reduce flows by about 16 percent in the Apalachicola-Chattahoochee-Flint river basin that runs along the Alabama-Georgia border into Florida's Apalachicola Bay.
The river system contains five federal dams, including the Buford Dam at Lake Lanier. The other system involved in the dispute is the Alabama-Coosa-Tallapoosa, which flows mostly in Alabama.
Riley said any final agreement must take into account both basins, and he said after a press conference that the corps had agreed to increase the water flows into Alabama through another Georgia reservoir, Lake Allatoona. Corps Major Daren Payne said later that the agency had agreed to delay until December its normal policy of cutting flows from Allatoona that typically begin in the fall.
Perdue said Georgia had not made any decisions about continuing a lawsuit it filed against the government last month but suggested it might pull back from the litigation so long as the parties continue negotiating in good faith. Kempthorne said the governors had committed to meeting again next month and to finishing a drought water-management plan by mid-February.
Despite years of failed negotiations, the governors said they were optimistic they could find a compromise.
"Failure is not an option this time," Riley said. "We are in the middle of the most severe drought we've ever had."