BEIJING, July 16 (Reuters) - Chinese scientists have warned that rising temperatures are draining wetlands at the head of the the country's two longest rivers, choking their flow and imperilling water supplies to hundreds of millions of people.

The warning occurs as millions of people along central China's flood-ravaged Huai river, a major tributary of the Yangtze river, are bracing for more heavy rains this week.

Aerial photos and satellite images had shown wetlands on the frigid Qinghai-Tibet plateau, which feed the Yangtze and Yellow rivers, had shrunk more than 10 percent over the past four decades, the China Daily said on Monday, citing the Chinese Academy of Sciences, a key government think-tank.

"The wetlands at the origin of the Yangtze have suffered the most, contracting by 29 percent," the paper said.

Wang Xugen, a CAS researcher, said the wetlands played a key role in regulating the flow of the rivers, which provide water for hundreds of millions of people and nearly half the country's farmland.

"The shrinking of the wetland on the plateau is closely connected with the global warming," the paper quoted Wang as saying.

Last month, CAS warned that rising temperatures could wipe out the plateau's glaciers by the end of the century, triggering more intense droughts, sandstorms and desertification across the country.

Guaranteeing water supplies to sustain its 1.3 billion people has a become a major concern in China, where decades of breakneck industrialisation have befoulled most of the country's rivers and lakes.

Local authorities in Changchun, capital of northeast Jilin province, are grappling with a blue-green algae outbreak that has squeezed water supplies from a reservoir feeding the city's seven million residents, Xinhua news agency said in a separate report.

Water supplies to millions of residents have been affected in a series of algae outbreaks across the country in recent months, attributed to unusually warm and dry temperatures and pollution from farm run-off.

On July 4, water supplies to 200,000 people in Shuyang county, Jiangsu province, were halted for more than 40 hours after ammonia and nitrogen were found in a local river, state media reported.

In late May, a major outbreak in Taihu lake, the country's third biggest, cut off water supplies to over 2 million residents of Wuxi city, also in Jiangsu.