The water industry watchdog is probing payments to the bosses of a string of suppliers following the revelation that Yorkshire Water's offshore parent company had handed its chief executive more than £1m in previously undisclosed fees.

Sky News has learnt that Ofwat, which is to be abolished by the government in the coming years, wrote to a number of water companies earlier this month to scrutinise similar remuneration arrangements to those employed by Yorkshire Water and its holding company, Kelda Holdings.

Industry sources said on Monday that some of the biggest operators in the sector were among the recipients of Ofwat's letter.

Disclosure of the regulator's enquiries comes in the wake of a report in The Guardian which said Nicola Shaw, the Yorkshire Water boss, had received payments

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