Water companies in Sussex should be fined millions of pounds if they fail to fix their leaky pipes, MPs demanded today.

The House of Commons Public Accounts Committee said water suppliers should face "the maximum financial penalties" if they repeatedly missed their annual leakage targets.

Industry watchdog Ofwat can fine failing companies up to ten per cent of their water-related turnover - but has so far been reluctant to use its power.

Southern Water, Sussex's largest supplier, missed its leakage target by a small margin last year.

The company was ordered to reduce its losses to 92 million litres per day by the end of March 2006. It missed this by 0.75 million litres per day.

An Ofwat spokeswoman said Southern was still within its three-year rolling average target and no regulatory action was deemed necessary.

Another Sussex supplier, South East Water, achieved its 69 million-litres-perday target.

Committee chairman Edward Leigh MP accused Ofwat of taking a "limp attitude" towards the industry.

Mr Leigh said: "Ofwat has been passive in its regulation of the water industry. At the same time it has paid little heed to the interests of water users."

Pointing to the watchdog's inaction over Thames Water, which missed its annual leakage targets six years in a row "without so much as a slap on the wrist", Mr Leigh said: "In future, such a wanton waste of water by a company must be rewarded with the maximum possible fine."

Today's report urges Ofwat to take legal advice on the possibility of revoking companies' licences if they miss their targets.

The MPs' report said water customers should be encouraged to use meters.

The report cited research which found metering could reduce household consumption by up to a fifth by providing a financial incentive to cut waste.

Only 28 per cent of Sussex households are currently fitted with water meters.