Mr Alexander's salary in the nine months to the end of December will increase to £1.4m from £572,000 the previous year.

The pay rise attracted criticism from various consumer groups, including the National Campaign for Water Justice.

"The Government promised other methods to curb salaries paid out but in reality since Tony Blair's second term they haven't had any effect," said Neil Fishpool, chairman of the campaign group.

Peter Bowler, of lobby group Waterwatch, added: "Bonuses should be paid when mergers and takeovers [are] shown to be cost-effective and profitable."

Mr Alexander's new pay package was approved by Thames Water's parent company, German utility giant RWE.

A company spokesman said: "Our executive directors' remuneration is based both on a business package but it also includes a number of one-off payments that reflect considerable progress made during the period in question."