25 February 2011 Last updated at 04:51 ET
The policy, first announced by the regulator Ofwat in 2009, lasts from 2010 to 2015.
Ofwat said the profits generated by higher prices would help finance £22bn of spending on improved services.
"People can shop around for the best deal on many things, but not water. Our job is to do this for them," said Regina Finn, Ofwat chief executive.
"This will deliver real benefits to consumers - from almost ten million people's water supplies being better protected from events such as flooding to cleaner rivers and beaches," she added.
The precise bills that households receive will vary according to their local water company and whether or not they are on a water meter.
The average figure is not a uniform rise for all firms and disguises wide variations from one part of the country to another.
Among the big combined water and sewerage firms, the smallest forecast increase this coming year, according to Ofwat's figures, is likely to be 2.7%, or £11, for customers of Welsh Water.
The largest rise will be 7.8% or £24 for customers of Northumbrian Water.
Among the smaller water-only firms, customers of Portsmouth Water will receive bills that are just 2.5% higher this coming year, an increase of £2.
Customers of Bristol Water will have to pay an extra £13 this year, a rise of 8.2% on their water bills.
Water bills in England and Wales up nearly 5% in April
Water and sewerage bills in England and Wales will go up by 4.6% this April, to an average of £356 per household.
The coming financial year is the second of the current five-year policy under which prices will be allowed to rise roughly in line with inflation.The policy, first announced by the regulator Ofwat in 2009, lasts from 2010 to 2015.
Ofwat said the profits generated by higher prices would help finance £22bn of spending on improved services.
"People can shop around for the best deal on many things, but not water. Our job is to do this for them," said Regina Finn, Ofwat chief executive.
"This will deliver real benefits to consumers - from almost ten million people's water supplies being better protected from events such as flooding to cleaner rivers and beaches," she added.
The precise bills that households receive will vary according to their local water company and whether or not they are on a water meter.
The average figure is not a uniform rise for all firms and disguises wide variations from one part of the country to another.
Among the big combined water and sewerage firms, the smallest forecast increase this coming year, according to Ofwat's figures, is likely to be 2.7%, or £11, for customers of Welsh Water.
The largest rise will be 7.8% or £24 for customers of Northumbrian Water.
Among the smaller water-only firms, customers of Portsmouth Water will receive bills that are just 2.5% higher this coming year, an increase of £2.
Customers of Bristol Water will have to pay an extra £13 this year, a rise of 8.2% on their water bills.
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