Water customers have not been given a rebate since 1998

The one-off �20 payment has been announced by the Pennon Group, which owns South West Water.

It coincides with a 14% increase in the group's profits to about �94m and will be water customers' first rebate since 1998.

The money will be paid in the spring, and equates to about half the average �40 increase in next year's bills.

Water meters

The region has the highest water bills in the UK, partly because of the cost of keeping the coastal region's sea water clean.

Customers in Devon and Cornwall pay an average of �400, compared to the national figure of �280.

The announcement has been given a guarded welcome by the water watchdog.

The Consumer Council for Water South West (CCWater South West) said the rebate was good for customer relations, but consumers were still paying a "disproportionate" price for water services.

Charles Howeson told BBC News: "It is admirable that SWW is sharing this one-off payment.

"Customers will benefit to the tune of �20, but they should expect the rises to continue."

Mr Howeson added that CCWater South West would keep doing what it could to defend consumers in the region.

A �10 rebate was given in 1996 and the following two years customers got �15 off their bills. No rebates have been made since then.

In November the government announced an affordability study assessing the benefits available and the effect of switching to water meters, which could help people on low incomes.