But the report added that, in the south east of England in particular, demand for water is still running too close to supply and further improvements are needed.

Water companies need to maintain their focus on managing leakage

Auditor General, Sir John Bourn

"As a result of the improvements made by the water industry since the mid-1990s leakage levels are now generally better than average by international standards," said Auditor General Sir John Bourn.

But he added: "Water companies need to maintain their focus on managing leakage."

Sir John also said that companies should do more to encourage their customers to reduce the amount of water they waste.

The chairman of the parliamentary committee which oversees their work, David Davis agreed there was still a need for regulators to maintain a "robust line" in protecting consumers' interests.

People served by Thames Water should be especially alarmed

Chairman of the Public Accounts Committee, David Davis

Mr Davis, chairman of the Public Accounts Committee, said: "In some parts of the country there remains a real cause for concern.

"People served by Thames Water should be especially alarmed.

"In their region water resources are classified as tight and leakage, at 27%, is still unacceptably high.

"Two further companies - Welsh Water and South Staffordshire Water - have high leakage and a water resource position that is less than adequate."