The Government has urged South West Water against a possible £25 price hike next year as the industry regulator is encouraged to get "under the skin" of the sector.
In the latest round of the political battle over spiralling living costs, Environment Secretary Owen Paterson has written to all water companies to get them to ease the burden on customers.
But doing little more than urging water firms to offer a "fair deal" risks criticism following the fanfare of a bills crackdown and many families in Devon and Cornwall paying more than £1,000 a year.
But in an interview with the Western Morning News, new Water Minister Dan Rogerson says Government is providing "political cover" to allow industry regulator Ofwat to get "tough" on bills.
The North Cornwall MP said as long as investment was not jeopardised "we don't want to see bills going up unnecessarily". "That is now a matter for Ofwat to get under the skin of all the companies," he said.
South West Water's average charge is still £499 – £111 above the national average – a result of botched industry privatisation in the 1980s and the reason the coalition Government has started giving each household in the region a £50 a year bills subsidy.
South West Water will shortly decide how much it intends to increase its range of charges from April next year. But the ceiling, which is linked to inflation, could mean adding £20 or £25 to the average charge.
In his letter, Mr Paterson urges companies to crack down on customers refusing to pay, which adds £15 a year to the average bill, with the industry's worst performers challenged to match the best.
He also highlights a new voluntary database for landlords to provide information about tenants to water companies to chase them for payment.
Mr Paterson said: "We are pressing hard to make sure customers get a fair deal, by encouraging water companies to look closely at any price increases, introduce social tariffs for vulnerable customers and crackdown on bad debt."
South West Water has already introduced a "social tariff" that gives 10,000 low income customers discounts of between 15% and 50% on bills.
Pointing out that bills fell last year thanks to the £50 rebate, South West Water said: "We are very mindful of the need to keep bills affordable and believe our plans will reflect that concern as well as striking the right balance with the need to keep investing to protect the South West's environment and boost its economic recovery."
Labour's recent pledge of a gas and electricity bill freeze has shifted the political focus to the cost of living "crisis".
Speaking to the WMN, Mr Rogerson indicated Ofwat is the "key player" in driving down water bills. The regulator has said with borrowing cheap and Victorian infrastructure upgraded, bills could come down by up to £750 million a year from 2015.
Mr Rogerson, a Liberal Democrat MP, said: "From the Government's point of view, it is making sure Ofwat know they have the political cover from us to really explore what the companies can do to share that lower cost of borrowing with bill payers.
"As long as we can continue to deliver investment and resilience, we don't want to see bills going up unnecessarily. That is now a matter for Ofwat to get under the skin of all the companies in their negotiations."