Welsh Water is planning to spend �1bn over five years on improvements to its service

Welsh Water said the cash would fund a �1bn programme of investment over this five-year period.

It said money was needed to meet new quality standards set by the government and regulators, as well as tackling problems such as sewage flooding homes.

Consumer group WaterVoice said it wanted water bills in Wales brought down, but that at least the company was planning to consult its consumers over planned changes.

Spokesman Clive Sterl said prices should be brought "more in line with the national average for England and Wales".

"I think Welsh Water are going to find it very difficult to get customer support for these proposals," he added.

Welsh Water is publishing its draft proposals on Friday, and is calling on customers and stakeholders to give their responses.

Deciding what is and is not included in our plans for the years ahead will involve some difficult choices Mike Brooker, Welsh Water

The company plans an annual four per cent increase above and beyond inflation from 2005.

This would mean the average bill in Wales in 2010 could be �350.

Half of the �1bn the firm is proposing to raise would be spent on meeting safety standards.

Mike Brooker, managing director of Welsh Water, said it was aiming to deliver high standards at the lowest possible cost.

"Deciding what is and is not included in our plans for the years ahead will involve some difficult choices," he said.

"That is why we want to see a wide debate about what should or should not be included."

Clive Sterl, from WaterVoice,

Review process

The proposals are the latest stage in the five-yearly water price review, which is carried out by Ofwat - the regulator for the water and sewerage industry in Wales in England.

The process determines how much water companies invest, and how much customers have to pay to finance these costs.

The review process also involves the Welsh assembly, the Environment Agency and the Drinking Water Inspectorate, as well as WaterVoice Wales.

The new price limits will be effective from 1 April 2005.