Up to 99.98% of samples taken met the Drinking Water Inspectorate's standards for safe, reliable water, up from up from 99.93% in 2005.

The result means that the water, which costs on average 78p a day, is of a higher quality than 10 other major water and sewerage companies.

The company serves eight million people across the Midlands.

A Severn Trent spokesman said: "We are extremely pleased that our investment and hard work is reflected in this year's results but we will not be stopping there.

'Missed targets'

"Over the next few years to 2010 there are extensive schemes to control nitrate levels, modernise filtration equipment, as well as a comprehensive mains cleaning programme, all of which contribute to better quality water."

In June, the firm said its pre-tax profit rose 9.5% to �252m in the 12 months to 31 March from a year earlier after it restructured its business.

But a spokesman said that targets for stemming leaks from its pipeline network had probably been missed.

The company is already facing a fine from regulator Ofwat for missing earlier customer service performance standards.