Most water companies are delivering on their promises to maintain, and where necessary, improve service levels to consumers, regulator Ofwat said yesterday.
But it warned it would get tough with any trangressors.
The report, Levels of service for the water industry in England and Wales 2005-06, reviewed the performance of the water industry over the past year.
It found that progress had been made over sewer flooding and low water pressure problems.
Water restrictions imposed by some companies had been unwelcome, but had enabled them to carry on providing consumers with a continued supply.
Ofwat's head of consumer affairs Sue Cox said: "I am pleased to see that companies are generally delivering on the promises that they made to their consumers to maintain
good service levels and provide improvements where necessary. Nearly £1 billion was included in our price limits for 2005-10 to allow a significant reduction in flooding from sewers which consumers are already beginning to benefit from."
Ofwat is investigating three companies for their poor consumer performance.
It has previously published its intention to fine Southern Water, Birmingham-based Severn Trent Water and Thames Water.
Ofwat said it could not say what future regulatory action would be required, including the scale of the penalties, until the investigations were complete.
Ms Cox said: "I recognise that the performance problems in three companies have raised concerns among consumers. Our aim is to make sure that consumers' interests are protected."