Diners are buying a new version of ordinary water for £1 a litre, 1,000 times more than it would cost if it came out of a tap.

Saf, a vegan restaurant in the Whole Foods department store in Kensington, London, uses a machine to turn ordinary mains supply into ionised water, which it serves in re-usable glass bottles. According to one of Saf's founders, Joe McCanta, the result is a highly alkaline water healthier than other waters and acidic drinks such as coffee, tea and alcohol. Saf in Kensington, as well as its forerunner in Shoreditch, London, sells an initial litre of ionised water for £1, although diners can request more bottles for free.

By comparison, 1p buys 10 litres of tap water from Thames Water, 99.9 per cent of whose water meets European and national standards.

Coca-Cola was forced to withdraw its Dasani water in 2004 after derision greeted the news that it was little more than treated mains water from Thames Water in Sidcup. That mishap drew parallels with an episode of the BBC comedy Only Fools and Horses in which the main character, Del Boy played by David Jason, bottled "Peckham Spring Water" from the tap in his high-rise flat.

Despite acknowledging that some people would inevitably be unimpressed with his product, Mr McCanta insisted the fee for his water – which he described as a "service charge" to cover the cost of the ionising machine and carbon filters – was good value.

Costing £1,200, the ionising machine charges the mains water in two chambers, before the more alkaline water is passed through a carbon filter, which removes chlorine and other chemicals, while retaining fluoride and minerals. Diners may also order free tap water, although the benefits of the pH 10 ionised water will be explained to them.

"A number of sustainable restaurants are charging £1 for a bottle of filtered water but it's not really doing anything," Mr McCanta said.

"I can see why people think it is a scam but it's something that's an option, we don't push it and we have a lot of information to back up why it's different to the filtered option."

While restaurants have been selling bottled water for years, the sale of filtered or otherwise treated tap water is part of a trend that is re-inventing ordinary mains or spring water as a life-affirming elixir that, it is usually hinted, bestows extra health benefits. Indeed, far from being on the way out, the bottled market is thriving.

After a couple of years when sales fell due to the recession, bad weather and environmental concerns, the amount of bottled water drunk by Britons rose by 1.4 per cent to just over 2 billion litres last year, according to market researchers Zenith.

Natural mineral waters such as Perrier and Evian take the lion's share of the market, 61 per cent, followed by spring water on 27 per cent.

Flushed by the industry's recovery, Zenith estimates sales will rise by 12 per cent to 2.3 billion litres by 2014.

Central to the revival is the message that bottled is purer than tap, and healthier than alternatives such as sugary colas. "There is no healthier drink than bottled water – it is the ultimate thirst-quencher minus the calories, sugar or additives that other bottled drinks may have," says the industry body, the Natural Hydration Council.

Among the new waters are Pepsi's V Water, which combines spring water, vitamins, minerals and herbal extracts "into one refreshing drink", and comes in six flavours – De-stress, Detox, Glow, Kick, Shield, Vital V.

Also popular are lightly flavoured spa waters with fruit juices, with supermarkets and mineral water companies stocking a range of grapefruit, elderflower and peach-infused waters.

At the glossier end of the market, enterprising people have been devising ever more expensive products for the public, often with the effervescent approval of celebrities.

Bottles of Bling h2o, from Dandridge, Tennessee, for instance, come in frosted and corked limited editions with hand-applied Swarovski crystal. Paris Hilton has been spotted drinking it.

At £59 per litre, Bling h2o was the most expensive of 57 bottled water brands surveyed last year by Excellent Development, a charity which provides drinking water in Africa at a cost of half a penny per litre.

Other expensive bottles were Love H20, averaging £35.60, from Wenlock Springs in Shropshire, and White Hole Springs, £16.73, from the Mendip Hills in Somerset. Simon Madrell, Excellent Development co-founder, said: "We wanted to explore the contrast between the sheer choice of waters we have in the UK, to the limited access to water experienced by the communities we work with in Africa. At any one time a UK resident can choose from 57 bottled waters, all of them with different tastes, branding and market appeal."

Despite the high prices charged, many people view bottled water as a rip-off. A YouGov poll last month found that 60 per cent of UK adults saw bottled water as a waste of money, with almost three quarters of respondents (71 per cent) agreeing that tap water was as clean as bottled water. They were not asked for their views on ionised water.

Other new waters...

* Coca-Cola launched Dasani in the UK in 2004, neglecting to alter its US marketing strategy, which saw it labelled "bottled spunk", a PR disaster soon topped when it was revealed to be treated water from a tap in Sidcup.

* Rather than sell boring mineral water at a mark-up, Pepsico launched a new power drink, V Water. "Tired? Stressed? Run Down? V Water gets you through your day," declared the company's marketing campaign.