Water regulator Ofwat has called for more competition between water providers, saying customers should be able to pick their own providers.
Customers are "being left behind", Ofwat has said, because without proper competition, water companies are not being encouraged to innovate.
There could be savings for customers if a more competitive system was set up, but Ofwat said these would probably be small - amounting to £8 per year. The major benefit for the consumer would be improved customer services and new offers, such as packages of energy, telecoms and water, all sold together.
Fifty-six per cent of people surveyed by Ofwat said it would be good to have more choice.
Cathryn Ross, chief executive of Ofwat, said: "We are living in an age of retail revolution, but water customers are being left behind.
"The service offers from water companies can feel behind the curve compared to the innovation customers benefit from when buying other goods. The uncomfortable truth is that, when it comes to retail offers, water companies provide an analogue service in a digital world.
"Customers tell us they think they should have the freedom to choose and don’t understand why water is the only retail market in which there isn’t some form of competition."
The government would have to decide how, and when, to introduce competition into the water system, Ofwat said.