Water firms will spend £44bn over the next five years after final approval was given by the industry’s regulator.
Ofwat published its final determination for Asset Management Period 6, which runs from 2015 to 2020.
Major projects set to take place during that spell include Severn Trent Water’s Birmingham Resilience project, Wessex Water’s integrated supply grid, and modernisation of United Utilities’ Davyhulme wastewater treatment works.
The controversial Thames Tideway Tunnel will also get underway, although this will be financed and delivered by an independent provider.
Ofwat said the deals it had struck with water companies meant real-term bills would fall by an average of 5% across England and Wales before inflation.
Work over the next five years will see 370M litres of water saved through leakage prevention and efficiency promotion. An estimated 4,700 fewer properties will be flooded by sewer water, and beaches will also benefit.
Ofwat chairman Jonson Cox said: “This is an important step in maintaining customers’ trust and confidence in the water sector.
“We set out to deliver a challenging but fair outcome. We are requiring companies to meet higher service standards and deliver on their promises to customers.
“We are bringing down bills so customers can expect value for money, while investors can earn a fair return. Companies will need to stretch themselves to deliver much more with the same level of funding as in previous years. We will achieve more resilient infrastructure and better service as a result.”