Severn Trent Water has paid off whistleblower David Donnelly - the man who blew the lid on a £42 million over-charging scandal.

Staff at the Sheldon company have been told that Mr Donnelly has finally taken early retirement with a payment made to recognise the firm's "inadequate handling of Mr Donnelly when he first raised his complaints".

The size of the pay-off has not been revealed by either party, although one report claimed Mr Donnelly had been seeking more than £500,000.

In March this year water watchdog Ofwat found that Severn Trent had "deliberately miscalculated" data which led to 3.5 million customers being overcharged over six years.

The damning verdict against the water giant followed an 18-month investigation after Mr Donnelly, a former income and debt manager with the group, exposed the overcharging.

Customers throughout the Midlands will now be £20 better off after Severn Trent agreed to credit accounts and adjust price rises planned over the next five years.

The water company said in a statement: "Mr Donnelly, along with a number of staff, took part in a disciplinary hearing.

"No comment has been made, or will be made, by the company on any individual case, including Mr Donnelly's."

Mr Donnelly, who worked for Severn Trent for 30 years, could not be contacted for comment.