Spending a penny could soon save homebuyers pounds - and help the environment - thanks to a recycling venture called Waterwise.

The pilot experiment is based around a small single garage on the new Oakenhurst Farm Estate just outside Blackburn, Lancashire.

Here, Anglian Water and Beazer Homes are working together to install the Waterwise System for the first time in the UK.

It takes all the waste water from the 123 homes, cleans and recycles it on the site and returns a third of it to be flushed again down the loo.

The result should be that residents use about a third less water - the equivalent in a year of 1500 showers for a family of four - save 30% on water bills, and be part of an eco-friendly, environmental initiative.

Steve Marjot, the project manager for Anglian Water, described the system as the ultimate in recycling water. He said: "For years people have said 'isn't flushing the toilet such a waste of water?' Now we have the answer."

Darren Bell, of Beazer Homes - the third largest housebuilder in Britain - said water was becoming an ever more precious resource.

He added: "Our responsibility to be more waterwise doesn't mean going short of water, rather it means reducing waste and making water work better for all of us."

Waterwise uses tried and tested methods of water treatment. All the water that leaves the house is collected in an underground tank.

It then passes through a fully enclosed treatment plant known as "black box". Two-thirds of the cleaned water then passes along a pipe to a nearby river under licence from the Environment Agency.

The other one-third will go through further water treatment and disinfection before being stored in a large underground tank for use when the toilet is flushed.

Statistics show a third of treated water delivered to most homes is flushed down the loo. Only 10% is used to drink or prepare food.

Now for no extra cost, these new-age homes will take a major step forward in water efficiency.

The sales force on the estate do not expect any resistance from prospective buyers over the subject of loo water and its immediate, local recycling. In fact, they say it is being used as a strong selling point.