South East Water (SEW) has announced the resignation of its independent non-executive chair, Chris Train, following a damning report.
The water company said new leadership was needed to "oversee a critical period of positive, transformative change for the company, its customers, and local communities."
It comes as a cross-party group of MPs say they have "no confidence" in SEW's leaders following a series of major supply outages.
The Environment, Food and Rural Affairs Committee said SEW's chief executive David Hinton and board had failed to address "multiple and ongoing failures", which left thousands of homes in Kent without drinking water.
Calls have also been made for Hinton, who was awarded a £115,000 bonus last year on top of his £400,000 salary, to quit.
Lisa Clement, the interim independent non-executive chair, said: "The company's focus remains on delivering engineering and operational changes that will strengthen the resilience of SEW's network and transform the company for the benefit of customers and local communities."
In a highly critical report published on Friday, MPs accused SEW of poor leadership, weak governance and a culture where nobody was held accountable.
Sources close to the environment secretary told BBC News: "The Secretary of State is looking at all options for turning this company and the wider industry around, including the possibility of calling in shareholders to understand their position on the ongoing issues at the company."
The committee said it had taken the "unusual but necessary step" of declaring no confidence in the company's executive team and board because of the seriousness of the failures.
The report said that while select committees do not normally focus on the leadership of individual private companies, MPs felt compelled to act because SEW appeared "shielded from the consequences of its incompetence".
Responding to the report, SEW said it plans to double investment into the water supply network serving Kent, Sussex, Surrey, Hampshire, and Berkshire over the next five years.
"The board and executive team reiterate their unreserved apology to those customers impacted by recent operational failures, and the resulting loss of public trust in the company and its services," it added.
Tunbridge Wells MP Mike Martin shared his view that this report "confirms that South East Water poses a clear and present danger to public health".
"It's not if there will be another water crisis, but when," he told BBC News, adding that he hopes the government uses this report to demand change.
Martin said: "The secretary of state for environment has to now call South East Water's owners and shareholders in and make clear that the leadership and board have to go.
"If not now, when?"
This report follows two parliamentary hearings into the outage at Pembury Treatment Works in late 2025, when tens of thousands of homes, schools, GP surgeries and care settings in and around Tunbridge Wells were left without clean water for up to two weeks.
Committee chairman Alistair Carmichael said: "One cannot overstate the dangers of so many communities losing water supply for extended periods, including schools, GP surgeries and care homes."
The committee is also urging shareholders, including the Utilities Trust of Australia, NatWest Group pension fund and Desjardins Group, to take action.
MPs said SEW failed to properly maintain infrastructure, prepare for extreme weather and support vulnerable customers during outages.
In one of the report's strongest criticisms, the committee said: "A company described by its leadership as having a 'family feel' is perhaps better described as an unaccountable clique."
The report also criticised the company's communication during the Tunbridge Wells incident, including incorrect information about bottled water stations.
Regulator Ofwat said South East Water had one of the worst records in the industry for supply interruptions over the last decade.
Ofwat is consulting on a proposed fine of up to £22.46m over failures linked to the Tunbridge Wells incident.