The UK’s water market is set for its biggest transformation since privatisation as it opens for competition between suppliers from this weekend.

From April more than 1.2 million businesses, charities and public sector bodies will be able to choose their supplier rather than rely on a supplier with a regional monopoly, in a first for customers in England and Wales.

The Government hopes that competition will lead to better customer service, lower costs and more innovation among suppliers as they vie for customers. Scotland already deregulated its water market for businesses in 2008.

Andrea Leadsom, the environment secretary, said: “Opening the market is an historic milestone, paving the way for innovation and efficiency and giving customers the same choice over their water retailer as they currently have for their energy and other essential services.”

Billions of pounds' worth of water contracts are set to be awarded to utilities in the coming weeks. The first major framework contract is expected to be awarded by Crown Commercial Services on behalf of the UK’s public sector and is understood to be worth between £800m to £900m.

A steady stream of contract awards from high street retailers Marks & Spencer, Next and Sainsbury’s will follow.

Cathryn Ross, chief executive of industry regulator Ofwat, said that major water users have long awaited the opening of competition in the hope they could secure better service at a better price.