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Under proposals to be outlined in its manifesto on Tuesday, Labour would create nine new public bodies to run the water and sewage system.
By ending the practice of paying dividends to shareholders, party sources say bills would be reduced by around £100 a year per household.
The manifesto will also promise 30 hours of free childcare.
A draft version of the document, which was leaked last week, committed a future Labour government to taking the railways and the Royal Mail back into public ownership while also nationalising the electricity distribution and transmission networks.
Labour's plans would also see the water industry, which was sold off by the government of Margaret Thatcher in 1989, return to public hands.
If elected on 8 June, it would create nine new public bodies to run the water and sewage system in England and Wales, that would be publicly accountable, retaining the existing workforce.
Party sources say by ending the practice of paying dividends to shareholders and reducing interest payments on debt, bills would be reduced by around £100 a year per household - the equivalent of a cut in water bills of around 25%.
The industry would be taken into public ownership either by simply buying the shares of the existing companies or by a compulsory measure whereby companies would have to be given government bonds in exchange for the shares.
A Labour source said: "Under Labour, rather than answering to its shareholders out to make a quick buck at the expense of increasing household bills and worsening service quality, utilities will be accountable to the bill payer, helping ease the burden of those struggling with the cost of living crisis."
There will also be an additional commitment in the manifesto to provide 30 hours of free childcare for all two to four year olds, covering 1.3 million children.
Labour is yet to publish its full costings for these policies and will not reveal their full plans for taxation until the manifesto is published.
They have been clear that they will increase taxation for the wealthiest and increase corporation tax.