Water bills look set to rise by 13% - less than half the size of the increase demanded by water companies.
The decision by water regulator Ofwat means that annual bills could rise by an average of £33 over the next five years - from £249 to £282.
Water firms had called for a bigger increase, which would have resulted in average bills in England and Wales rising by £70.
The industry had called for extra cash to fund infrastructure projects.
Consumer groups argued against such a big increase - which would have seen bills rise to an average of £310 - saying the price rise would hit low income groups hard.
Under the price rises indicated by Ofwat, prices will increase most steeply for Wessex Water customers while Anglian bills will be nudged up by only 3%.
The most expensive average water and sewerage bill in 2009-10 is indicated to be £418 a year, for South West Water customers.
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