The compensation deal, together with pounds 224,000 in salary and pension benefits, brought his total payments last year to just under pounds 900,000.
Ian McCartney, Labour's employment spokesman, immediately attacked the "ridiculous lottery-style pay-out", saying it showed the need for a windfall tax on the privatised utilities.
"This money should be getting our youngsters into jobs, not padding out the pockets of utility fat cats," he added. "There should be an urgent inquiry into these payments by the regulator."
South West, which is facing two hostile takeover bids from rival water companies, said Mr Fraser received compensation for loss of office of pounds 336,000. The 1996 report and accounts show that he is also entitled to cash in 116,000 share options showing a paper profit of pounds 284,000. In addition he is receiving a pounds 50,000, 12-month consultancy fee from South West for "access to his international major capital projects experience".
Mr Fraser joined South West in 1990 a year after privatisation and left in February. The company got into trouble last summer after water supplied to the Torbay area was found to contain a bug which made it unfit for human consumption.