DRINKING water quality in the north west is the best it's ever been, claim inspectors -- despite a bug outbreak which threatened 10,000 East Lancashire homes this year.

The Drinking Water Inspectorate (DWI) today revealed that 99.7 per cent of water supplies tested in the region last year met required standards.

But inspectors have revealed that private company North West Water could face prosecution if it is found to be responsible for the outbreak of cryptosporidium which hit the Ribble Valley in March.

Residents of around 10,000 homes in Clitheroe, Chatburn, Downham, Worston and Barrow were forced to boil water for more than a week, and 55 people were struck down with stomach infections after cryptosporidium -- a tiny micro-organism -- was found in the water supply.

In a second outbreak in Chorley and Leyland in April, more than 50 people were struck down. The DWI's annual report, published today, mentions a new criminal offence introduced last year which means companies responsible for cryptosporidium outbreaks could face unlimited fines in the Crown Court.

Dr John Gray from the DWI today said investigations into both outbreaks were still ongoing. He confirmed that North West Water could face prosecution if it is found to have breached treatment standards.

Dr Gray said: "Water quality in the region is as good as it has ever been. There have been some one-off problems but the number of pollution incidents in general has gone down."

Tests carried out by the DWI in East Lancashire found 78 instances of contamination in 1999, compared with 112 in 1998. Last year's test results were 0.1 per cent better than 1998.

There were 27 serious pollution incidents in the north west in 1999, compared to 34 in 1998 -- and only six have been recorded so far this year.

Dr Paul West from North West Water said the company planned to spend £700million during the next five years improving the quality of drinking water. He added that the company's top priority was to replace iron water mains which can discolour tap water.

The company declined on comment on any possible prosecution.