Thames Water’s lenders have submitted a new rescue plan to prevent the UK’s largest water company from collapsing.

London & Valley Water, a consortium of large financial institutions and investors, has submitted proposals which include writing off about a third of the company’s near £20bn debt pile and investing an initial £5.4bn to stabilise its finances.

Fears that Thames could collapse first emerged more than two years ago, and the government has been on standby to supervise a form of temporary nationalisation.

But the firm’s investors said its plan would rebuild the company without the need for any taxpayer funding or government support.

The company serves about a quarter of the UK’s population, mostly across London and parts of southern England, and employs 8,000 people.

But it has faced heavy criticism over its performance in recent years over a series of sewage discharges and pipe leaks. In May, it was handed a £122.7m fine, the biggest ever issued by the water industry regulator, for breaching rules on sewage spills and shareholder payouts.

London & Valley Water said on Thursday that its plan was the “fastest and most reliable route” to turn around Thames, clean up waterways and rebuild public trust.

Investors said they would inject an initial £5.4bn into the company to shore up its finances and support future investment, but they suggested the cash injection needed to be set against “stretching but achievable and realistic performance targets”.

All water companies are subject to performance targets over leaks, pollution incidents and customer satisfaction levels.

London & Valley has argued the current targets in place for the company are unachievable and its current business plan needs to be adjusted in order for Thames to attract future investment, rebuild the company and improve its performance for customers.

It said under its proposals no dividends would be paid out to shareholders over the duration of the turnaround plan and that new shareholders would commit not to sell the business prior to March 2030.

Outstanding fines would also be paid, they added.

London & Valley Water said it aimed to reach an agreement with Thames and water industry regulator Ofwat “as quickly as possible this autumn given the urgent need to stabilise Thames Water”.

Mike McTighe, the proposed future chair of Thames Water under the terms of plan, said “from day one, we will inject billions in new investment”.

He added that under a new company board, there would be a focus on “reducing pollution and rebuilding public trust so that by the end of this decade Thames Water can once again be a reliable, resilient, and responsible company”.

Ofwat said it would review the latest plans.

In response to the proposals, Chris Weston, chief executive of Thames Water, said the announcement marked an “important milestone” in the company’s work to resolve its debt problems and secure its finances to “support the investment and performance improvements our customers expect”.

The revised turnaround proposals come after Thames suffered a major blow in its attempt to secure its future this summer when US private equity firm KKR pulled out of a £4bn deal.

In July, the boss of Thames Water, Chris Weston, said the company was “extremely stressed” and that it would take “at least a decade to turn around”.

Water bills for households in England and Wales have risen by £10 per month on average this year, although costs vary depending on suppliers. The bills for Thames Water’s customer have gone up from £488 to £639 a year on average.

Volunteers at a food bank say they are having to make changes to the services they offer because of a reduction in donations.

Didcot Emergency Foodbank was launched in 2009 by volunteers at Didcot Baptist Church but is down to reserves of about £10,000.

Manager Andrew Snell said: “This year to date we will have had £29,000 income in cash, and we will have spent close to £60,000 on food, so there’s a big gap there.”

Previously the food bank provided support to its clients twice a week for six weeks, with a three-month gap before another referral. It is now changing this to once a week for six weeks, followed by a longer six-month gap.

“We’ve gone back to being what we were before covid, which is an emergency food bank, as opposed to helping families on low incomes who are just about coping, or not quite coping,” Mr Snell explained.

The food bank receives about 75% of its donations via cash, and 25% from physical food donations, though five years ago it was the other way around.

“People were giving us the actual food but not so much in the way of money,” Mr Snell said.

“People were so generous in Didcot and the surrounding villages, they gave us more than we would ever need [during covid] and that’s where the reserve came from.”

The food bank still expects to support about 6,000 clients this year.

Mr Snell said: “It’s been absolutely great to be able to help families who are on the borderline, and obviously we’ll regret not being able to do that in the immediate future.

“We’ll be looking at things as we go along to see if we can relax what we’ve put in place but that’s a little way down the line. It’s a matter of regret.”

He added: “I hope we’ll be able to increase the donations and go back to full-on help for people who are going to get a bit squeezed out at the moment.”

South Oxfordshire District Council’s community hub, Citizens Advice, schools and nurseries, medical practices, health visitors, housing associations and certain charities can officially refer people in need to the food bank.