Environment secretary Therese Coffey is expected to unveil the measures next week.
The government aims to “make polluters pay” and establish a “water restoration fund” where fines levied on water companies will be placed.
Under the proposed plans, water companies could face unlimited fines and penalties, with the most serious cases being taken through criminal proceedings.
According to the latest figures released by the Environment Agency, there were 301,091 sewage spills in 2022, averaging 824 a day.
Although discharges fell by 19 per cent last year, this was attributed to dry weather and not the efforts of water companies, the agency said.
Part of the plan is to strengthen the Environment Agency’s ability to impose sanctions on water companies without going through the courts, with a six-week consultation to be published.
The government is also said to support the lifting of the upper cap on civil penalties on water companies, enabling unlimited fines.
The new measures are expected to form part of plans to toughen enforcement against companies following pressure from campaigners to tackle pollution.
Opposition parties, including Labour and the Liberal Democrats, have criticised the government over the issue.
The Water Restoration Fund will direct money from higher fines and penalties, taken from water company profits rather than customers, back into rivers, lakes, and streams where it is needed.
The current penalties and fines imposed by Ofwat are returned to the Treasury, but under the new plans, the money will be redirected to the Department for Environment, Food and Rural Affairs.
Campaigners have accused water companies of discharging sewage more often than they should, even during dry weather, and have called for water companies to invest in more infrastructure.
The new fund aims to support community-led projects, including the restoration of wetlands, the creation of new habitats, and adding natural bends to rivers to improve water quality.