Therese Coffey is reportedly backing away from plans to hit water companies with fines of up to £250 million for spilling sewage into rivers and seas.

The Environment Secretary wants to look at a “range of options”, although sources insisted the £250 million proposal remained on the table.

Ms Coffey’s Department for the Environment, Food and Rural Affairs (Defra) said water companies “must be held to account” for poor performance and record fines totalling £101 million were handed out in 2021.

The Government announced plans last year to expand the use of the civil variable monetary payments (VMPs) that the Environment Agency can issue, meaning sanctions can be imposed more often without drawn-out court cases.

A consultation will be held on changes to the penalty cap in the spring, but Ms Coffey’s predecessor Ranil Jayawardena had planned to dramatically increase the maximum from £250,000 to £250 million.

The Times reported Ms Coffey resisted the measure while she was deputy prime minister under Liz Truss and has refused to back the tougher penalties.

The newspaper quoted allies of the Environment Secretary saying that she wants to “make sure that fines are proportionate and easy to enforce” and she will “look at the evidence with a fresh pair of eyes and do what is most effective”.

A Defra source told the PA news agency: “The £250 million fine option is definitely still on the table.

“The Environment Secretary is very clear that she wants to consult on that proposal, along with other options.

“Ultimately we have to make sure that regulators have the powers they need to hold water companies to account.”

We are clear that water companies must be held to account for poor performance

Alongside the use of VMPs, the Environment Agency can take action through the courts, including pursuing criminal prosecutions with unlimited fines.

A Defra spokesman said: “We are clear that water companies must be held to account for poor performance.

“That’s why we are making it easier for regulators to enforce fines and hold them to account. More detail on this will be set out in our consultation in the spring.

“Record fines of more than £102 million were handed out in 2021 following successful prosecutions.”

Meanwhile, concerns about water pollution could trigger a Tory revolt in the Lords.

The I newspaper reported that peers are preparing to block plans to scrap European Union clean water regulations as part of the Retained EU Law Bill, which is making its way through Parliament.

One Tory peer told the newspaper “the whips are going to be concerned” about the potential for a revolt.