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Thames Water has announced a new charging system which will lower annual bills for water and wastewater services beginning this April.

The charges for over 38,000 customers have been reviewed to better reflect their water usage, the UK's largest water company said.

The fairer system will be tiered, placing properties in one of three "bands" based on the number of bedrooms at the property.

According to the new Assessed Household Charge plan: "Properties with one or two bedrooms will fall into bands 1 and 2 and will now pay less than the current charge of £245."

Those in one and two bedroom houses will see charges at £200 and £217 respectively.

The 24,000 clients, typically living on their own or in small flats, falling into these bands account for 63 per cent of customers currently on the average charge.

Customers with three bedrooms or more will see an increase in charges to around £266.

"It was clear that in some cases the charges didn’t reflect the amount of water they actually used," said customer services director Mike Tempest.

"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," he said.

Customers will be contacted this week informing them of which billing category they fall under.