Such action would mean that water customers, already facing steep increases in charges, might have to pay higher bills to connect other households to water and sewerage systems.
Where water and sewerage companies are asked by local authorities to provide connection to homes, the authorities usually pay part of the cost, and grants of up to 35 per cent have been available from the department.
A consultation document issued last week by the DoE questions whether this system should continue. Higher bills for other water customers are likely to be strongly opposed by the industry regulator, Ofwat.
Robert Atkins, environment minister, said: 'The majority of these (unconnected) households can manage well with alternative forms of sewerage, but in a minority there is evidence of odour and pollution problems.
'We believe that where a sound environmental and financial case can be made, the best way forward is for all water customers in an area to meet the cost of mains connection.'
The department said about pounds 3m was spent on the scheme last year and pounds 4m the previous year.
The Water Services Association said it was too early to comment on the report. Ofwat said there was an issue to be addressed but it needed time to examine the DoE document.
Ian Byatt, director-general of Water Services, may order a company to connect properties to sewerage systems if he deems it a duty.
He believes, however, that the cost should be borne by the beneficiaries.
An Ofwat guidance note on the issue states: 'He will not support general charge increases to fund extensions to the system.'
A spokesman for Ofwat confirmed: 'That is our view and we will be expressing it as part of the consultation process.'
The DoE's position that all customers in an area should meet the cost of rural connections could raise problems for water and sewerage companies who have just agreed tough new price controls with Ofwat which will take effect from next April.Reuse content