The DWI report shows that tap water is improving

Three million samples of drinking water were tested from 26 water companies - 3,418 failed to meet requirements, compared to 25,000 a decade ago.

Government ministers said the findings show standards are "edging higher and higher".

But the report warned that more needs to be done to satisfy consumer demands.

The DWI was critical of water companies' handling of customer complaints.

From next year companies will be required to tell the watchdog about all complaints.

Expectations

And Prof Jeni Colbourne, chief inspector of drinking water, said that the treatment of some consumers was "not acceptable".

She said: "Consumer expectations are higher than ever and more needs to be done to maintain consumers' confidence in their tap water.

"It's not acceptable that some consumers in some parts of the country continue to receive discoloured or bad tasting water."

I think it is timely to remind everyone concerned that they cannot afford to become complacent Elliot Morley Environment Minister

She said that nearly one fifth of old cast iron pipes have been renovated or relined but further work needs to be done.

"My inspectors are busy working with water companies to make sure this happens as quickly as practicable," she added.

But Prof Colbourne said that overall the record of year-on-year improvement was "very good".

She added that the improvements had been brought about by major investment since 1990.

And two water companies - Severn Trent and South Staffordshire - were singled out for special praise for exceeding the national average.

'Delight'

The results come as strict new rules have been brought in by the European Commission.

The commission has used recommendations from the World Health Organisation to enforce its tougher regime.

And this year is the first time the WHO's standards have been used by the DWI.

Environment minister Elliot Morley said he was "delighted" that the quality of drinking water continues to improve.

KEY WATER FACTS National totals 2,896,252 tests carried out 3,418 failed to meet standards 99.88% success rate Severn Trent 280,462 tests carried out 185 failed to meet standards 99.93% success rate South Staffordshire 37,223 tests carried out 34 failed to meet standards 99.91% success rate

But he warned: "Although today's report shows standards edging higher and higher to the best ever, I think it is timely to remind everyone concerned that they cannot afford to become complacent."

He echoed the DWI's concerns about "isolated hotspots" where homes still receive dirty water.

The DWI produces an annual report for the Department of Environment, Food and Rural Affairs (Defra).

In addition, the European Commission requires each EU country to provide data every three years on drinking water quality.