Discoloured tap water prompts more complaints from householders than any other issue about water quality, the industry inspectorate revealed today.

Almost 120,000 complaints were made about the colour of water pouring from taps last year, from a total of 146,000.

The figures were released in a report on water quality which shows that 99.96 per cent of tap water in England and Wales met minimum safety standards, up on 99.94 in 2004.

However, while only a tiny proportion of tap water failed to meet minimum standards, 2,597 people contacted their suppliers to claiming it had made them ill.

The Drinking Water Inspectorate pointed out that the reason for water falling short of health standards was often because of the condition of pipes and tanks in the home.

Dead birds in uncovered tanks are commonly found, others are sited beneath places where birds roost and defaecate, while pipework in some homes is still made of lead so that toxic particles flow out of taps.

With health so rarely an issue, the concerns that consumers raised about their supplies were mainly about the look, taste or odour of the water.

Customers in the South West Water area were the most vociferous, with more than 15 people complaining for every 1,000 of the population. Customers in Northumbria were the second-most likely to complain.

They, like consumers in all but Tendring Hundred Water and Portsmouth Water, found discolouration the biggest problem.

Taste or odour of water, including problems with the level of chlorination, accounted for the second biggest number of complaints with more than 30,000 customers raising it as a concern.

The report by the Drinking Water Inspectorate said that the companies could and should do more to reduce discolouration.

Andrew Marsh, of the Consumer Council for Water, said that the quality of tap water was extremely high, but called on companies to reduce the frequency of discolouration, poor taste and odd-smelling supplies.

"Discolouration very, very rarely indicates any deterioration in quality and safety and wholesomeness. It’s an aesthetic concern more than anything else," he said.

"However, customers have the right to receive water that both looks and smells good. There’s an issue here of people not drinking tap water because of its appearance and spending money on bottled water."

Ian Pearson, the environment minister, said that customers had "rightly high" expectations of drinking water quality and water company service.

He welcomed the Drinking Water Inspectorate’s report findings: "The results show that England has some of the world’s best quality tap water. This is a direct result of the massive investment made in the way that our water is treated and supplied."

Jeni Colbourne, chief inspector of drinking water, said that the number of allegations by customers that tap water had made them ill was not fair on the companies, and that it indicated more effort on informing consumers of quality standards needs to be made.

"Our finding that 99.96 per cent of tap water meets UK safety standards is great news for the consumer. Tap water is safe to drink," she said.

Pamela Taylor, chief executive of Water UK, which represents water and sewerage companies, said that the quality of drinking water in England was now at "record levels".

She said: "Consumers can confidently turn to their tap and get a hydrating supply of safe, clean and refreshing water.

"We recognise, however, that a limited number of consumers from time to time receive cloudy or discoloured water. The water companies are working hard to address this."

The report was issued as Ian Barker, the head of water resources at the Environment Agency, said that all homes in the South East should have water meters fitted by 2015. Such a measure, combined with low-water-use appliances, was the most effective way to reduce consumption and avoid the threat of droughts, he said.

New reservoirs and desalination plants will only increase supplies by 6 per cent, he added. "It’s critical that water companies look at other options to reduce water use, and to make better use of existing reserves."

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