The Environment Agency has said it is not convinced there is a need to build a £1bn reservoir in Oxfordshire.
The new reservoir will be located south of Abingdon in Oxfordshire
The controversial development near Abingdon is designed to safeguard London, Oxfordshire and Swindon's water supplies in case of a drought.
But the plans would also mean that some residents could be forced to move.
A series of public exhibitions showing detailed plans for the reservoir - the biggest to be built in the UK in 25 years - starts in Abingdon on Saturday.
The exhibitions will focus on what the reservoir may look like, how it would work, the impact of construction on the local communities and local wildlife and recreation.
A consultation began in September last year but the Environment Agency said Thames Water has failed to respond fully to some central issues and had not proved a need for the reservoir.
Craig Woolhouse, area manager for the agency, said they agreed that Thames Water could not meet the forecast growth in water demand without finding a new water source.
But he added: "We still believe the company can take its leakage reduction and demand management much further to reduce impacts on the environment from use of water."
Water watchdog Ofwat has described Thames Water as the UK's leakiest supplier.
Some people could be forced to sell their homes
The company said it would continue its discussions with the Environment Agency and the county and district councils, to address issues raised.
The reservoir would be half the size of Windermere in Cumbria and hold 150 billion litres of water pumped from the River Thames.
If the plan is approved, the reservoir could be built within 15 years.
Richard Aylard, Thames Water's environmental director, said they are inviting local people to have their say on the plans.
He said: "We are aiming to help people understand the scale and technical requirements of the reservoir, including what construction will be necessary and where pipelines and treatment works might be sited.
"We want this to be a real opportunity for local people to help shape their environment."
2. Possible construction area
3. Existing East Hanney to Steventon road