THOUSANDS of Thames Water customers are to receive cheaper bills under a new pricing structure based on the size of their homes, the company announced today.

Households whose bills are based on the average metered bill, or Average Household Charge, will be placed in one of three bands based on the number of bedrooms at the property.

Thames said the new tiered system, called the Assessed Household Charge, would better reflect the amount of water households use and mean lower bills for those living alone or in small homes.

It said just under 24,000 properties with one or two bedrooms would see their bills drop to either £200 or £217 a year, down from the current charge of £245.

Those living in homes with three or more bedrooms, thought to be 11,500 properties, will see their bills increase from £245 a year to £266.

The company said the new charges followed a survey last year of all Thames Water customers on the Average Household Charge to find a fairer system.

Those who did not respond would have their properties placed into band 3 by default, but would be able to correct this by contacting the company.

Thames Water customer services director Mike Tempest said: "Last year we decided to review how some of our customers were charged for their water use, as it was clear that in some cases the charges didn't reflect the amount of water they actually used.

"We wanted to make our charges fairer for those customers who wanted to pay for what they used but couldn't have a meter fitted.

"The drought we experienced in 2006 demonstrated that customers wanted to take responsibility for the amount of water they used, with many asking us to fit meters.

"And while we were able to fit many more meters than we had planned, there were customers, particularly those living in blocks of flats, where it is not possible for us to fit a meter.

"We know that customers want to pay for what they use. By splitting the charge into three bands, their bills will better reflect the true consumption.

"We would like to thank everyone who took part in the survey. Over 90 per cent replied and there's no doubt that this high response rate has helped us to design a system which is as fair and accurate as possible."

A spokeswoman for the Consumer Council for Water said: "This is something that we did urge the company to introduce because other water companies have adopted a similar approach.

"Clearly people living in smaller flats are likely to have comparatively small usage. If they can't have a meter fitted it's only right that set charges should reflect that."

Thames Water customers on the Assessed Household Charge will be contacted by letter or email this week telling them which band their property falls into, with bills following in April.

Annual bills for other customers will be sent out later this month.

Thames said the bands, which are yet to be approved by water services watchdog Ofwat, are expected to be as follows: Band 1: studio/one bedroom, 2008/09 charge £200 (2007/08 charge £245) Band 2: two bedrooms, 2008/09 charge £217 (2007/08 charge £245) Band 3: three or more bedrooms, 2008/09 charge £266 (2007/08 charge £245)