Severn Trent said today it would cut 10% of its workforce over the next five years.
Britain's second-largest water company announced that it planned to cut 600 jobs by 2012, in a drive to cut costs and improve efficiencies.
Tony Wray, Severn Trent's managing director, said that the posts would be lost across the company's front office, back office and field operations. It currently employs around 6,000 permanent and agency staff.
"This is all about improving efficiency. Our customers deserve the highest standards and lowest charges we can get for them," said Mr Wray. "If you get more efficiency, then you can do more with less."
He explained that the company is now beginning to consult with employees and unions. He cited improved telemetry systems, which give the company a better idea of problems in its network of pipes, as one factor which means it will need fewer workers in the years ahead.
More details on the job losses will be released at the company's full-year results announcement in June.
The job cuts come less than a year after water regulator Ofwat said that it planned to impose a financial penalty on Severn Trent for its poor level of customer service, after it emerged that the company had failed to achieve performance standards. This penalty, which could amount to up to 10% of the company's turnover, has not yet been imposed.
Ofwat said today that Severn Trent's customer service performance needed to improve.
"We will continue to monitor their progress in compensating customers and restoring customer services to acceptable levels," said an Ofwat spokesman, explaining that the regulator would take action if the company failed to improve its performance.
Last summer, Severn Trent was also criticised by Ofwat for failing to control water leaks. It was losing 540m litres of water a day last year.
Mr Wray said that the company had taken steps to reduce leakage, and that he had "a high degree of confidence" that it would hit Ofwat's target for this year.
"Our reservoirs are full, and we have very good stock levels. Compared to previous years we are in a very healthy position," he said.
The Serious Fraud Office began an investigation into Severn Trent in October 2005 into allegations that it supplied incorrect leakage information to Ofwat.
Severn Trent also said today that pre-tax profits for the last 12 months would come in between 1% and 3% higher than the £400.4m it made the previous year.
Its shares were up 17p at £14.62 in afternoon trading.