The chief executive of London’s water provider has resigned with immediate effect after criticism of her £1.6m pay packet and the company’s environmental performance.

Thames Water announced its chief executive Sarah Bentley was stepping down after less than three years in the role.

The announcement comes just weeks after it was reported that Ms Bentley will receive pay and perks worth £1.6m this year – nearly double her annual salary.

That is despite Thames Water saying she would give up her bonus due to the water industry’s continued struggles with sewage outflows and leaky pipes.

Raw sewage was pumped into the rivers and streams of the capital for more than 7,000 hours last year.

The decision to forgo a bonus had been described as a “flimsy PR stunt” by the GMB union.

In the interim, she is being succeeded by the company’s chief financial officer Alastair Cochran and the strategy and regulatory affairs director, Cathryn Ross, until the search for a permanent replacement concludes.

Ms Bentley joined Thames Water in September 2020 after serving as the chief customer officer at Severn Trent water company for more than five years.

It was payments to incentivise her move to Thames Water that led to the £1.6m pay award for 2023.

Susannah Streeter, from financial service company Hargreaves Lansdown, said it was “highly unclear” why Ms Bentley had resigned from Thames Water.

But she added that “pressure had been mounting on water bosses over their high remuneration”.

Danni Hewson, head of financial analysis at online investment platform AJ Bell, said the resignation suggested a “disagreement behind the scenes about the best way to deliver for the public”.

“Her sudden departure will draw speculation about why she’s stepping away so soon,” she added.

Thames Water chairman Ian Marchant thanked Ms Bentley “for everything she has done” since she joined the business, including “building a first class executive team and leading the first phase of the turnaround of the company”.

Ms Bentley said: “It has been an honour to take on such a significant challenge, and a privilege to serve Thames Water’s dedicated and inspirational colleagues.

“The foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance.”