Thames Water has been severely criticised for failing to effectively manage Oxfordshire's water supply.

Liberal Democrats, meeting in Brighton for their annual conference, berated the company for leaking millions of litres from pipes every day and said failing suppliers should be converted into not-for-profit companies.

Delegates passed a motion demanding compulsory metering to tackle water shortages. Meters would save Oxfordshire households an average of £22 a year, the party claimed.

Figures from water watchdog Ofwat show that the average Thames Water customer without a meter paid £166 in the last financial year, compared with £144 for metered households. Only 22 per cent of Thames customers have water meters.

The Government is reluctant to order compulsory water metering because large families are better off with a flat fee.

The motion also says firms that "persistently fail to meet their targets for reducing leakages" should be forced to follow the business model of Welsh Water, which has no shareholders and reinvests all financial surpluses for customer benefit.

Action should also be taken against companies that do not promote "sustainable water use", like dual-flush toilets.

Thames sparked fury earlier this year when it announced a 31 per cent rise in pre-tax profits to £346.5m, despite missing its target for reducing leaks for the third year in a row.

Liberal Democrat spokesman on the environment, Chris Huhne MP, said: "As climate change begins to cause severe droughts, we must act to use our water resources more effect- ively.

"This can be achieved through metering, proven to reduce usage and bills, and giving more powers to tackle water companies who fail to reduce leaks.

"We must also look at turning failing firms into not-for-profit companies."