Thames Water's boss has warned a potential nationalization under Labor would fail taxpayers.
Britain's biggest water firm also said it will run out of money by the end of next May but efforts to raise new money are continuing.
Chris Weston, chief executive of the company, said: “Special administration is something that is not in the interests of any of our stakeholders or the UK taxpayers.
“I can't put any probability on whether it will or won't happen, but it is a long way off if it were to happen and there is a lot more that we can do and will do and are focused on doing over the coming months to make sure that that does not happen.”
Thames Water, which is creaking under a debt pile of more than £15 billion, said that it had £1.8 billion of cash reserves at the end of June, a fall from £2.4 billion three months previously.
Sir Keir Starmer has pledged to crack down on Britain's water suppliers, pledging to put failing companies into “special measures” if they don't “clean up their act” on sewage pollution.
A spokesperson for Number 10 said on Monday the water industry was in an “unacceptable situation” and had not done enough to tackle pollution.
Communities minister Jim McMahon said: “We recognize that, over the last 14 years, frankly, the water industry has not been regulated anywhere near as firmly as it should have been, and we haven't seen the investment to deal with the sewage. scandal.”
Thames Water said the number of sewage discharges more than doubled last year.
The firm's boss blamed heavy rainfall linked to climate change.
Mr Weston admitted that “our performance in pollution and sewage discharges is not where it should be or where we want it to be”.
Thames Water revealed that sewage discharges shot up from 8,015 to 16,990 in the year to the end of March while pollution incidents rose 6% from 331 to 350.
Mr McMahon said there is “no program of nationalization for the water industry” when asked what the plan is if the company collapses.
He also said there is “no provision in law for a water company to stop providing water”, adding: “We need to be very clear there is always a contingency in place.”
Thames Water said it is still looking for new funds needed to maintain and update its infrastructure after investors pulled the plug on £500 million of emergency cash earlier this year. If it ultimately fails to attract fresh funding, Thames Water's fraying finances could present Sir Keir Starmer's newly elected Labor Government with a significant industrial crisis.
A blueprint codenamed Project Timber was being drawn up in Whitehall in the spring, according to reports, which could see the company effectively nationalised. Under the plans, the company would be placed in a form of special administration in the scenario that its parent company fails.
Regulator Ofwat will on Thursday publish a draft verdict on water companies' five-year spending plans and bill increases to 2030. That will kick off six months of negotiations with Ofwat ahead of its final decision in December.
Thames Water, which has 16 million customers in London and the Thames Valley region, wants to hike customers' bills by up to 44 percent.
Consumer groups and campaigners have hit back at the suggestion of bill rises.