The saga of Britain's long-running water pollution crisis has taken a new turn after a challenge was launched that could end up with six water supply companies being taken to court.

In recent years, there has been increasing public concern about the frequency of sewage discharges into the country's waterways and coastal waters, causing major environmental damage and public health issues.

A tribunal hearing involving six water companies began in London on Monday, and by the end of the week there should be a ruling on whether or not it can proceed to a full-on court case.

It is alleged that the companies, including the largest, Thames Water, which has around 15 million customers, have under-reported the number of sewage discharges to the water industry regulator Ofwat, enabling them to charge customers higher bills, with Reuters reporting that the figure could be as high as 1.5 billion pounds ($2 billion).

A lawyer representing environmental consultant Carolyn Roberts, the person wanting to bring the action, told the hearing that Thames Water alone may have failed to report in excess of 6,000 discharges.

The water companies have questioned the legal validity of the challenge, and a statement from industry body Water UK called the case "highly speculative … entirely without merit".

"The regulator has confirmed that over 99 percent of sewage works comply with their legal requirements," it added.

In 1989, the Conservative Party government sold off the 10 regional water authorities in England and Wales to private companies, as part of a wider government policy of opening state services to the commercial market.

Unlike other privatizations, such as energy supply, however, water did not result in companies competing to offer customers better deals, but it has seen huge dividends paid to shareholders, with bill payers questioning why their bills have continued to rise and why an outdated infrastructure is leading to so many discharges of untreated sewage.

On Oct 26, the Flood the Streets march will take place in London, to protest against the state of the water industry.

In July, Thames Water said it could run out of cash by the end of next May, and in August it said it wanted permission to increase bills by 52 percent over the years until 2030, to pay for necessary new investment, but Ofwat has suggested bill increases should be limited to 21 percent.

"We want to deliver a considerable increase in investment in our infrastructure," said Thames Water's Chief Executive Chris Weston. "The money we're asking for from customers will be invested in new infrastructure and improving our services for the benefit of households and the environment."

Weston added that the increases were necessary "to make up for years of focus on keeping bills low".