The company said the review found governance and management oversight failures which meant there were errors in the reporting of the volume of water it lost through leaks in these years.

It said it was “sorry and disappointed” for the error and that the problems identified have now been corrected.

The corrected figures show that leakage is higher than it was previously reported and water consumption is lower.

Automatic £10 payments to customer accounts

Welsh Water serves 1.4 million homes and businesses. All customers with the water company, which covers Wales and some parts of England, will be paid the £10 automatically.

It applies to anyone who had a Welsh Water account on 31 March this year and the money will be credited to the account.

The company said the payments will be phased and it could not confirm exactly when they will be paid but said it would be within the next six months.

It said it had now allocated an additional £54m to tackle water leaks over the next two years. It will spend £284m in total between 2020 and 2025.

Pete Perry, chief executive officer, said: “We are very sorry and disappointed that this has happened.

“Whilst our robust assurance process ultimately identified the issue, there were failures in our governance and management oversight processes that allowed this in the first place. We have made the necessary changes to how we manage leakage reporting and closed the gaps in our reporting and governance processes.”

Ofwat is reviewing the information from Welsh Water to decide if further action needs to be taken.

Just three in 10 customers are aware of financial support for water bills

Meanwhile, separate research from industry regulator Ofwat found that a third of households are unaware of the financial help available from their water provider.

Almost one in four, 23%, are currently struggling to pay their water bill, compared to 20% in October 2022, and 15% a year ago in March 2022.

The percentage of households who say they have never struggled to pay a household bill in the past year has also fallen from 45% in 2021 to 25%.

In the last year, 56% of people said they had struggled to pay household bills frequently. Of those 68% were women and 46% were men.

Just 7% of water bill payers said they had received financial support from their water company.

Claire Forbes, senior director of corporate communications at Ofwat, said: “Ofwat’s message is clear: water companies must continue stepping up and supporting their customers who are struggling financially.

“No customer should be left behind, particularly those in challenging financial circumstances. Today’s research shows that support for customers struggling financially is still not reaching those who need it the most.

“There has been some good progress from water companies in this area, but now is not the time for complacency: when Ofwat sees poor performance from water companies in this area we will not hesitate to act.”