The revelations come as 26 firms have outlined their concerns to the water regulator, Ofwat, ahead of a review that will fix price controls for five years from 2005.

Bob Armstrong, chairman of Water UK which represents the private water companies in England and Wales, has warned that a Railtrack-style crisis could ensue unless old pipes are replaced.

"Look at the problems with the maintenance of the rail infrastructure, which was caused because the assets were time-expired," he told the Independent on Sunday.

"In water we have a classic case of time-expired infrastructure," he explained, referring to the old pipes which need replacing rather than just repairing.

"The problem needs addressing in this price review or eventually we'll get to a Railtrack-style issue," he warned.

Creaking utilities

The privatisation of the UK's railways meant that firms, fighting to be profitable, did not spend the necessary money on maintaining or replacing track.

Similar fears of under-investment have already been raised over the UK's gas, power and water networks.

Part of the problem is that, in order to ensure a competitive market and protect the consumer, the regulator caps price rises.

Senior industry executives say the worst case scenario would mean a "double digit increase" in water bills, according to the Sunday Telegraph.

Philip Fletcher, the water regulator, has acknowledged that bills may have to rise in order to finance substantial maintenance programmes.

""It is too early to say by how much bills will go up - it will vary and not all may go up," he told the Sunday Telegraph.

It is unclear exactly how much of the UK's water pipes need replacing, but Water UK estimates that replacing a quarter would cost the industry �50bn.