Severn Trent said yesterday that it had significantly plugged the leaks its 29,000-mile network of pipes.
The Birmingham-based water and sewerage company was the only one in the industry to miss its leakage reduction targets last year.
It also faces prosecution by the Serious Fraud Office following claims that it fed false leakage data to the industry regulator.
The most up-to-date figures showed that ST lost 525 million litres of water every day in the year to March 2007. It plugged waste by nine million litres a day, but was well short of the 17 million litres target set by regulator Ofwat.
At the time the figures were announced last August, ST said it was spending an extra £45 million on tackling the problem.
In an interim management statement to the stock market yesterday, it said: "Our focus on continuous improvement is delivering tangible results in our improved performance on leakage management, with a significant reduction in levels of leakage.
"We remain on track to achieve the Ofwat annual target for the year ending March 31, 2008."
Yesterday's brief statement, which came ahead of a pre-close period trading update on April 2, said the gross economic cost of last summer's flooding remained unchanged at between £25 million and £35 million. Expected insurance recoveries also remain unchanged at £10 million-£20 million.
At the time of its interim results announcement last November, ST said the cost of the floods across Tewkesbury, Cheltenham and Gloucester had washed away its profits growth.
Flooding forced the evacuation of the company's Mythe water treatment works near Tewkesbury and 50 million litres of bottled water were distributed to afflicted customers.
It was said to be the biggest single emergency that the UK water industry had ever faced.
ST also said yesterday that current trading was in line with expectations and it was on track to meet Ofwat's operating cost targets for the full year 2007-08.
The company, which serves 3.7 million household and business customers across central England and parts of Wales, has recently axed hundreds of jobs as it restructured and turned itself from a multi-interest conglomerate back into a core water and sewerage business with a greatly streamlined management structure. It has plans to relocate its HQ from Sheldon to a new £45 million base in Coventry.