Northern Ireland Water is closing the gap in standards between itself and water companies in the rest of Great Britain.
The Northern Ireland Audit Office have been examining how the service has fared in its first few years.
Drinking water quality now meets 99% of European standards less than a percent lower than England and Wales.
The regulator and the Drinking Water Inspectorate have reported that significant quality issues remain.
The Department for Regional Development set a target to maintain current quality levels for the next three years.
Although the department has stated that it is not funded to achieve parity with England and Wales.
The number of water quality incidents with potential health impacts has increased, partly due to improved reporting.
Waste water discharges from treatment works have also improved, with NI Water reporting 90 percent compliance with standards.
This compares with virtually 100 percent in England and Wales.
Intermittent discharges from sewer systems, previously criticised by the Public Accounts Committee have not been fully assessed by the Northern Ireland Environment Agency.
NI Water is responsible for nearly a third of all pollution incidents in Northern Ireland.
The Department believes that because NI water is the single largest body discharging, the risk of pollution is greater, and the quality of bathing water can be affected by NI Water's sewage discharges.
Reported leakage levels have reduced steadily since 2001 but improvements to measurement in 2008 indicated that the level was higher than previously thought at 181 million litres a day.
The Department estimated that leakage is costing around £5m a year.
Water companies are not expected to fix all leaks but rather to reduce leakage to an economic level where it would cost more to fix leaks than to produce more water.
NI Water does not have an accurate measure of the economic level of leakage (ELL) for Northern Ireland making it difficult to measure performance but a new ELL figure is expected in 2011.