An investigation will be launched into how water companies handled last week’s bad weather after thousands of homes were left without their water supply.
Therese Coffey said Ofwat would be encouraged to take action “to ensure water companies up their game” and that the Government expects the regulator to “formally review the performance of the companies during this period.”
The environment minister said the review would consider whether statutory compensation should be paid, adding water companies should consider how they can reimburse customers on a discretionary basis.
Water shortages caused by burst pipes have led to problems for thousands of properties and the closure of Jaguar Land Rover and Cadbury plants in the Midlands.
“Ofwat will be given any powers it needs and we will back them in action they need to take to ensure water companies up their game,” said Ms Coffey, making a statement in the Commons.
Ofwat chief executive Rachel Fletcher criticised companies for their lack of preparation, support and communication with customers, saying they had “fallen well short”.
She added: “The ongoing water supply problems affecting the country, most particularly parts of London and the South East of England, have been deeply distressing for all those affected.
“While the recent severe freeze and thaw have undoubtedly had an impact on pipes and infrastructure, this weather was forecast in advance. A number of water companies appear to have fallen well short on their forward planning and the quality of support and communication they’ve been providing, leaving some customers high and dry.”
Some households are facing their fourth day without a water supply.
Updating MPs, Ms Coffey said 5,000 properties were still affected in Streatham as of Tuesday morning, with work to remedy the problem due to be completed later in the day.
She said 867 properties in Hastings were still experiencing problems but should be reconnected on Tuesday afternoon.
South East Water has identified about 2,000 properties across Kent and Sussex still without supply, Ms Coffey said, adding that she expected them to also be reconnected on Tuesday.
The minister also said South West Water has about 1,500 properties affected, although this number was changing as the thawing from last week’s weather moved further west.
Thames Water said it was working to remove airlocks in pipes which were preventing water from flowing in the London postcodes SW12, SW16, SW17 and SW18 and surrounding areas.
Severn Trent Water has now restored water supplies the majority of their customers but some areas are still be experiencing intermittent supply as the network starts to get back to normal.
Firms supplied bottled water at affected sites but such was the demand that some stations temporarily ran out.
It follows criticism from Environment Secretary Michael Gove last week, who warned water companies to clean up their act or face tougher regulation.
He told company bosses they had not been acting “in the public interest”, accusing some of “playing the system for the benefit of wealthy managers and owners”.