LONDON (Reuters) - Traces of the anti-depressant Prozac have been found in Britain's drinking water supply, setting off alarm bells with environmentalists concerned about potentially toxic effects.

The Observer newspaper said Sunday that a report by the government's environment watchdog found Prozac was building up in river systems and groundwater used for drinking supplies.

The exact quantity of Prozac in the drinking water was unknown, but the Environment Agency's report concluded Prozac could be potentially toxic in the water table.

Experts say that Prozac finds its way into rivers and water systems from treated sewage water, and some believe the drugs could affect reproductive ability.

A spokesman for Britain's Drinking Water Inspectorate said Prozac was likely to be found in a considerably watered down form that was unlikely to pose a health risk.

"It is extremely unlikely that there is a risk, as such drugs are excreted in very low concentrations," the spokesman said. "Advanced treatment processes installed for pesticide removal are effective in removing drug residues."

But environmentalists called for an urgent investigation into the findings.

Norman Baker, environment spokesman for the Liberal Democrats, said it looked "like a case of hidden mass medication upon the unsuspecting public."

"It is alarming that there is no monitoring of levels of Prozac and other pharmacy residues in our drinking water," he told the Observer.

The Environment Agency has held a series of meetings with the pharmaceutical industry to discuss any repercussions for human health or the ecosystem, the Observer said.

Prescription of anti-depressants has surged in Britain. In the decade up to 2001, overall prescriptions of antidepressants rose from 9 million to 24 million a year, the paper said.