The massive increase is part of Central Highland Water's Five-Year Plan which includes an investment of $400 million in water and waste-water programs from 2008 to 2013.

Water prices will rise by 25 per cent this year, 5.1 per cent the following and 3.1 per cent for the final three years of the project.

CHW Customer and Community Relations general manager Paul O'Donohue said the plan had been approved by the Essential Services Commission late last month.

Mr O'Donohue said the average bill would rise by $3 per week or $150 per year but CHW had "beefed up its hardship policy" for those who would face problems paying up.

Free financial counselling advice was available from Ballarat, he said.

Mr O'Donohue agreed many people were already facing financial strain over mortgage fees and petrol costs but said the water plan had been in the pipeline for the past two years and mostly finalised up to 12 months ago.

Customers had also expressed their preference for larger price increases in the first year, he said.

The plan includes sewer containment projects in Daylesford, the completion of the Goldfields Superpipe and sewer and water mains renewals throughout the region.

Other projects include town sewerage schemes for Waubra, Gordon, Smythesdale and Blackwood along with water quality improvements in Avoca and Landsborough.