Thames Water's shareholders have agreed to a £750m funding deal to the end of March 2025, less than the £1bn the company expected to ensure it avoids nationalisation.
The supplier said the agreement is a "major milestone", but the group admitted that "significantly" greater support will be needed in following years for its turnaround to be delivered.
When discussing the possibility of further support from shareholders for the period 2025-2030, Thames Water said it "will depend on the finalisation of the business plan and the regulatory framework that will apply".
Thames Water is the UK's biggest water supplier. The company has 15 million customers, serving households across London and the South East.
However, the company's annual results showed the utilities supplier has accumulated £14bn in debt, an increase from £12.9bn the previous year. This year alone, the company's losses amount to £82.6m.
As a result of the company's financial situation, the government has reportedly begun to prepare contingency plans in recent weeks to place the firm into a special administration regime if needed. This was the same insolvency process used when energy supplier Bulb collapsed in 2021.
Nonetheless, the group's interim co-chief executive, Cathryn Ross, insisted the utility company was "absolutely not" close to being placed into special administration by the government.
"We have a £4.4bn liquidity pile that we're sitting on, which means we can access £4.4bn of cash and credit facilities," she told BBC Radio 4's Today programme. "They're right there if we need it. That's absolutely enough to pay everything we think we need to pay this year, next year and into the future."
She added the government has a "very high bar" before putting a firm into special administration "and we are not close to it".
Ross has taken over the position after Sarah Bentley resigned last month amid mounting worries over the financial stability of the company.
Thames Water chairman Ian Marchant said the new deal is "the largest equity support package ever seen in the UK water sector".
The funding secured adds to £500m already injected in March this year by its investors.
The company has also come under pressure in recent years over its poor performance in tackling leaks and sewage contamination, while facing criticism for handing out big rewards to top bosses and shareholders.
In May, the government's National Drought Group (NDG) urged water companies to better prepare the UK for erratic weather patterns that could lead to drought following an unusually dry summer last year.
Earlier this year, a House of Lords committee urged regulators to go further to hold water companies to account for environmental pollution through penalties and prosecution. In response, the ten major English water management companies issued a joint apology and recognised they failed to address sewage spills in beaches and rivers quickly enough.
