Sitting in her north London restaurant, Juliette Banner pours herself a glass of what is probably the most expensive tap water in the world.

Thames Water charges the Crouch End restaurateur less than a tenth of a penny for each litre it pipes, or about 0.02p per glass. Yet, for the past three years, Banner has been asking her customers to cough up 15p per glass, an astonishing mark-up of almost 75,000 per cent that would, if slapped on wine, cause a riot in even the most refined Chelsea restaurant.

The difference is that Banners, a low-key bistro where no two chairs are the same and whose patrons include the musicians, artists, and media types who dot this leafy corner of the capital, donates all the money it makes on tap water to WaterAid, a UK charity that helps some of the 1.1 billion people in the world for whom a glass of safe drinking water is just a dream.

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Banner's brainchild has been so successful – more than 6,000 diners have so far donated more than £10,000 – WaterAid has taken on her initiative and is in talks with at least one major restaurant chain in the hope that, soon, all the country's food outlets will start offering water for small change that could make a big difference.

"It's outrageous that in the 21st century a sixth of the world's population can't get clean water," says WaterAid's fundraising chief, Alan Machin, who heads up the charity's Tap into WaterAid campaign. "If one restaurant in London can raise £10,000, a significant sum in the world's poorest nations, think what we could do as a country."

Banner, the former partner of the troubled radio presenter Andy Kershaw, was inspired by a growing consciousness that in the UK we take for granted easy access to tap water. But, concerned that customers might sniff at a charge for what she calls "one of the last free things in life", Banner sat on her bright idea. "People told me I was mad, and when I went round to other restaurants, and showed them information packs, it was like hitting my head against a brick wall," she recalls, "but I had a feeling that it would work."

And work it did. Banner slipped information sheets into her menus, whose pages bulge with exotic offerings such as Cambodian chicken skewers and Malaysian fish curry, and the pennies soon started piling up. "The response was fantastic," she gushes, "the customers were so tickled by it because it seems so cheeky to ask people to pay for tap water, but they loved it."

Banners still feeds and waters diners who prefer not to donate, and the restaurant continues to stock mineral water, but Banner says sales of bottled water are down. The news will delight campaigners who say our national obsession with packaged water – the industry is worth £2bn in the UK alone – is "morally indefensible".

Defra minister Phil Woolas invoked the ire of the bottled water industry by making the comments on the BBC's Panorama last month. But he is unrepentant: "I find it arrogant and in defiance of all logic that there are more than a billion people in the world who don't have access to safe water and yet, here we are with pure water on tap, buying the stuff in bottles. I'll say it again – it's morally indefensible."

Every day, we knock back some six million litres of bottled water in the UK – enough to fill almost two Olympic swimming pools. We pay an average 95p a litre, almost 1,000 times the price of the average litre of tap water. The industry, which has grown 200-fold in the past 40 years, produces 200,000 tons of carbon dioxide a year as firms ship in half a million bottles, the majority from France.

Watch a short film about Banners' pioneering WaterAid venture Courtesy of WaterAid