Thames Water has been fined £122.7m for breaching rules over sewage spills and shareholder payouts.
The penalty is the biggest ever issued by the water industry regulator Ofwat, which said the company had "let down its customers and failed to protect the environment".
The watchdog confirmed the fines would be paid by the company and its investors, and not by customers who were hit with water bill increases last month.
Thames Water said the company took its "responsibility towards the environment very seriously", and added it was continuing its search for new investment as it struggles under a £20bn debt pile.
The penalties come as Thames continues to face heavy criticism over its performance in recent years following a series of sewage discharges and leaks.
The supplier serves about a quarter of the UK's population, mostly across London and parts of southern England, and employs 8,000 people.
It has been almost two years since the dire state of the company finances emerged, but Thames managed to secure a £3bn rescue loan earlier this year to stave off collapse.
On Wednesday, Ofwat ordered Thames Water to pay a fine following two investigations into its operations.
A penalty totalling £104.5m has been issued for breaches of rules connected to Thames's sewage operations.
