Thames Water has decided to "suspend" its plans to pay large bonuses to senior executives linked to receiving a £3 billion rescue loan.

The boss of the troubled company is "apparently unacceptable," said Downing Street.

The company's "retention plan" is set to 50% of senior boss salary packs, which could result in them receiving £1 million on top of their annual salary and regular bonuses.

Thames has been accused by the Environment Minister of Environment for "trying to circumvent" the upcoming rules prohibiting water companies from paying bonuses.

Steve Reed told members of Congress on Tuesday that the company “has made its bonus grants differently, so they continue to pay.”

"It's obvious that after years of mismanagement, Thames shouldn't hand itself the bonus" was added Downing Street.

A Thames spokesman said in a statement that after the discussion, its board of directors “decided to suspend the retention plan” and awaited guidance from regulators that they could obtain new regulations to prevent any water company from distributing any bonuses.

Thames said it will wait for regulators to turn to ensure that the company "supports our turnaround goals and broader public expectations."

The spokesman added: “The Thames Commission’s intentions have never been the government’s inconsistent intentions to reform the water industry.”

The Thames has received serious criticism of its performance in recent years following sewage discharge and leaks.

The government has been on standby to include the Thames in special management since the company's financial situation first emerged about 18 months ago.

The company received an emergency loan of £3 billion in March to avoid bankruptcy and is now hoping to reduce its £20 billion debt pile by asking lenders to accept discounts on their owed payments.

The supplier serves about a quarter of the UK population, mainly in parts of London and southern England, and employs 8,000 people. It is expected to run out of cash completely by mid-April.

Regardless of what happens to the company in the future, water supply and waste services for the household will continue normally.

Reed said Thames had abandoned the retention plan and he was "very happy".

"It's the wrong thing. It offended the feeling of fair competition among their own clients," he added.

Thames has previously stated that its "reserve payment" is not a performance-related bonus covered by the new rules.

It said none of these reservation payments will be funded by customers.

Earlier Tuesday, Thames President Sir Adrian Montague clarified his comments on the prize money from the Council of Congress last week.

He said he could “misspel” when lenders ask about turnarounds for troubled water companies.

“We live in a highly competitive market and we have to provide these people with the right packages or the hunters will knock on the door,” he said.

In November of last year, Ofwat blocked three water companies – including Thames, Yorkshire Water and DWR Cymru Welsh Water – using client funds to fund a total of £1.6 million boss bonuses.