The company said the redundancies were part of group restructuring in response to tougher competition and calls by the water regulator for cuts in bills.

The reorganisation would save it £40 million a year, it added.

Anglian is the third water company to announce job cuts since the regulator unveiled its demands.

Last week Severn Trent announced 1,100 job cuts and on Tuesday, Yorkshire Water said it would axe 500 jobs over the next 12 months.

Robin Gourlay, Anglian chairman, said: "It has been clear for some time that the UK regulatory environment would become tougher and we have planned
accordingly."

Ofwat unveiled its latest price controls last month, calling for cuts of around £30 on domestic water bills.

Anglian has accepted the plans, which will mean a 10% fall in its customers' bills next year, taking the average to £245.

The company said the bills would remain stable until 2005.

Over the next five years Anglian said it would spend £1.4 billion improving water standards and meeting its environmental obligations.

Its strategy is to improve the cost efficiency in its regulated business and go for growth in other activities, such as its transport leasing business and sewage maintenance services.

The company will be based around three units - its day-to-day water operations, an asset management business and a technology group which will
provide services both to its own water operations and other companies.