Barking and Dagenham Council has re-negotiated the fee it receives from Essex and Suffolk Water (ESW) for collecting water and sewerage charges from council tenants.
The new contract was rubber stamped by the council's cabinet last week.
The council collects the rates and passes them on to the water board, for which it receives a fee. The previous contract gave the council 6.5 per cent commission, but the new one doubles this to 13 per cent - equivalent to £650,000 a year, or £1.95 million over three years. The new contract will be backdated to 1 April 2009.
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Officials have also negotiated more than £1 million in back-dated administrative fees.
Cllr Phil Waker, Cabinet Member for Housing, said: "This new contract represents good value for the council at a time when every penny matters. The extra revenue will all go towards housing services which means more investment for the tenants who are paying the water bills in the first place.
"Like all local authorities we are facing up to the toughest financial climate in decades. This contract is an example of how we're doing everything possible, not just to cut costs, but also to increase our income wherever we can."
(CD/KMcA)
