Water voles have declined by a fifth in the UK since 2011, a survey suggests.
Conservationists say that habitat loss, predation by American mink, and changeable weather are to blame.
The research was carried out by the Environment Agency and Wildlife Trusts, who are working to create more vole-friendly waterways.
Earlier reports had suggested that the animals were making a comeback. Conservationists say more needs to be done to save this species.
Alastair Driver, National Conservation Manager from the Environment Agency, said: "This creature is part of our waterway systems. People love walking along a canal and hearing the plop of a water vole into the canal. They are part of the food chain... part of the ecosystem.
"It would be a real shame to let that go."
Water voles, immortalised by Ratty from Wind in the Willows, were once a common sight in the UK's waterways.
But since the 1970s, water vole numbers are thought to have declined by more than 90%.
Mr Driver said: "There is no doubt this was a combination of two factors. First of all the loss of habitat and the breaking up of habitat, and then the escape of American mink into the countryside."
American mink were brought to the UK for their fur, but after some escaped, or were released, they established and spread, preying on water voles.
It has been a problem that has also been seen in other parts of Europe, particularly the Netherlands and Belgium.
Surveys across the UK have now shown another steep fall.
"Initially, we started to see an increase in numbers because of projects which were controlling mink and improving the habitat," said Mr Driver.
"But now we have seen a drop of about 20%."
A contributing factor was last year's drought.
Falling water levels exposed burrows, leaving the creatures vulnerable to predators.
Experts say that these animals can be brought back from the brink.
Schemes to conserve the vole's habitat and to rid waterways of mink have provided safe havens for the creatures.
They are still thriving in strongholds in Snowdonia, in the Fens and in the Somerset Levels.
In Oare Marshes, in Kent, too, numbers have been on the rise.
Darren Tansley from the Wildlife Trusts, said: "Here you've got networks of ditches, good water supply, lots of vegetation, which is good for cover and food.
"Where you have large areas of habitat that are quite complex areas, they are doing rather well because the main predator, the mink, cannot get into the networks to hunt them all out."
He said the Wildlife Trusts were working to create new habitats for the voles.
The Environment Agency is also aiming to create 10,000 hectares of wetland and rivers in a bid to boost water vole numbers.