Oxford MP Andrew Smith says Thames Water should be fined for failing to meet targets for stemming leaks.

The Labour MP for Oxford East, wants water regulator Ofwat to take on the water giant over its record on fixing leaks and the hosepipe ban when it is making massive profits.

He said: "I'm sure there would be strong public support for tough action on water companies that aren't making enough progress to stem the scandalous amount of leakages. People understand why there has to be a hosepipe ban but it's very annoying when they see how much water is wasted."

Thames Water, which has applied for a drought order in London to curb "non-essential" water use, including car washing, came under fire after profits rose by 31 per cent while 197m gallons of water leaked from its pipes each day.

Ofwat, the water regulator, has the power to fine companies up to 10 per cent of their turnover. This would be £140m in the case of Thames Water. In an extreme case, Ofwat could withdraw its licence.

Mr Smith said: "Ofwat should look very seriously to using its powers to the fullest extent to get much better performance.

"The hard-pressed customers who are paying the bills want to see money go on investment to save water and maintain services, rather than pay for inflated profits."

The MP added that the company should do "everything possible" not to raise water bills further until the problem of leakages was resolved.

Thames Water was criticised last week after missing its leakage targets for the third year running, despite announcing £346.5m pre-tax profits.

Water regulator Ofwat has partly blamed the leaks for the hosepipe ban imposed on thousands of homeowners in the region.

Figures showed 894m litres a day were lost in the company's area, including London, in the 12 months to March 31. Its target was to restrict it to 860m.

Thames Water spokesman Robin Markwell said: "Projects such as our recent pipe replacement work in Stokenchurch, Tiddington and Shabbington, near Thame, have helped to halve leakage in the Oxford area over the last three years. We are spending half a million pounds every day on work to bring the leakage rate down and leakage levels outside London are now at their lowest level since over a decade."