The government said it is ready to step in at Thames Water if the debt-laden utility provider continues failing its customers.
Robert Goodwill, MP and chairman of the Environment, Food and Rural Affairs Select Committee said the situation of Thames Water nearing insolvency was "of considerable concern".
He told the BBC: "They are around about 80% geared - that is like having an 80% mortgage on your house.
"We need to ensure this company does get itself on to an even keel financially so we can move forward, but the government is ready to step in if necessary.
"The primary role of the government is first of all to protect customers, and secondly to protect the environment.
"I think we all realise that we need more investment in cleaning up our water now that we are testing those outpours and know what is going on."
Earlier today, it was revealed Thames Water was set to undergo a last-chance round of discussions over a financial restructuring which could allow it to avoid insolvency.
Kemble, the group's owner, is expected to begin talks with lenders over a potential debt-to-equity swap in the hopes of avoiding a potential collapse.
Thames Water has been under the strain of a mounting debt pile since the end of the pandemic after interest rate rises meant the £18 billion it owed continued to swell.
Last week, the water provider said it would not be able to make debt repayments due next month after losing out on a £500 million rescue package from shareholders, raising the risk it may need to be nationalised.
Kemble Water said it would not pay interest payments on its debts and would not be able to repay a £190 million loan that matures on April 30 unless an extension is granted.