New York: New York state imposed new restrictions on shale gas drilling in watersheds for the cities of New York and Syracuse, citing concerns over drinking water safety and prompting victory calls from environmentalists.

The Department of Environmental Conservation (DEC) announced on Friday that applications to drill for shale gas in the two cities' watersheds will be taken on a case-by-case basis instead of falling under the general rules that will apply to the rest of the state.

For these cities it amounts to a "de facto ban" on the drilling process known as hydraulic fracturing, said Alex Matthiessen, president of environmental group Riverkeeper. He called the ruling a "huge win".

The drilling process involves blasting a mixture of water, sand and a proprietary list of chemicals through rock in order to split the shale formation and free trapped gas. It has come under heavy fire over concerns it may pollute ground water.

"Due to the unique issues related to the protection of New York City and Syracuse drinking water supplies, these watersheds will be excluded from the pending generic environmental review process for natural gas drilling," the state agency said.

New York City joined environmentalists in December in voicing strong concern the process might harm the city's fresh water supplies, which come unfiltered from a 5,200-square-kilometre watershed largely located in the Catskills Mountains north of the city.

"Portions of the Marcellus Shale where the city's watershed lies must be treated differently and the Department of Environmental Conservation's decision today recognises that crucial fact," New York Mayor Michael Bloomberg said.

Shale gas trapped deep underground is considered one of the most promising sources of US energy. Drilling companies have set off a drilling boom in the Marcellus Shale, the largest such formation in the United States, which extends below the surface in much of Pennsylvania and parts of New York, Ohio and West Virginia.

Some say the proposed separate track for the cities is not nearly enough and reiterated calls for a blanket ban.

"A complete ban on watershed drilling was the right thing a year ago, it's the right thing today, and it will remain the right thing for as long as we debate hydraulic fracturing in New York," Manhattan Borough President Scott Stringer said in a statement.