The average household water and sewerage bill in England and Wales will increase by 3.5pc, above the rate of inflation.
The average cost of a water and sewerage bill will rise to £388 from April 1 2013 and apply until March 31 2014.
Customers in the South East (HKSE: 0726.HK - news) face the biggest rise of £23 a year, while those in the South West will see an increase of £22 and families in Yorkshire will see an increase of £12 a year.
Speaking to BBC Radio 4's Today show Regina Finn, Ofwat’s chief executive, said the rise would form part of a five-year £25bn investment programme, to ensure customers get "safe and secure water".
“We understand that there is huge pressure on household incomes, and any rise is unwelcome. Inflation is driving these increases," she said.
“These rises will help pay for investment of around £1000 for every household in England and Wales.
"This will deliver real benefits - from continuing to improve the reliability of supplies to dealing with the misery of sewer flooding for thousands of customers."
The impact of the new charges will vary for individual household customers depending on the company that supplies them and whether or not they have a water meter.
Last month, Ofwat outlined proposals to encourage utility companies to pipe more water to drier areas of the country such as the South-East.
At present less than 5 percent of the UK’s water, some 650 million litres a day, is traded between firms in different regions, and this figure has barely changed since privatisation in 1989.
Ofwat said it wanted to introduce greater incentives for companies to transfer water from areas where it is plentiful, for example the North, to regions where it is scarcer, like the South-East, where drought led to the introduction of hosepipe bans last year.
At present there are limits on the amount of money utilities can make from selling water to other firms.
Ofwat hopes to increase the financial incentives for the companies to make trading water more attractive, with the aim of helping areas of the country that are most prone to droughts.
The regulator said the move could result in lower bills as it could be cheaper for firms to buy in water from other regions than to build expensive new resources, such as reservoirs.