The huge construction programme is part of a £51bn spending package outlined by the watchdog in its price review for 2020-25.
The money will be spent on cutting leakage by 16% and a host of major infrastructure improvements including £1bn on flood prevention, a new reservoir in Hampshire and the construction of a pipeline connecting water supplies from North Lincolnshire to Essex.
Customers will also see a reduction in average bills of about £50 before inflation while water company investors will see tougher restrictions on dividend payouts.
Ofwat Chief Executive, Rachel Fletcher, said: “Today we’re firing the starting gun on the transformation of the water industry backed by a major investment programme to deliver new, improved services for customers and the environment and resilience for generations to come.
“Now water companies need to crack on, turn this into a reality and transform their performance for everyone.
“They will be investing the equivalent of an extra £6 million each and every day to overhaul services, strengthen their infrastructure and improve our natural environment.
“And at the same time, customers’ bills will fall by an average of £50 before inflation.”
For a full breakdown of planned spending click here.