Householders will get between £50 and £60 compensation for the water scare which has been blighting parts of Lancashire for the past four weeks.
United Utilities announced this afternoon that letters have started to go out to customers advising them how much they will be paid.
And the company said it would be starting to send out cheques from tomorrow (Friday), although it could be the end of the month before some receive theirs.
The level of payouts has been set following discussions with the Consumer Council for Water.
But business users will still have to make individual claims based on the impact the cryptosporidium scare has had on their operation.
The compensation bill will cost United Utilities between £15m and £18m just for households.
Gary Dixon, customer services director for United Utilities, said: “We are now starting to compensate those customers who have had the boil water notice lifted.
“We recognise that our customers have been significantly inconvenienced over the last few weeks and they rightly deserve to be compensated.
“The payment reflects that inconvenience and takes into account the additional cost for boiling the water and a refund for water services over the period.
“In coming to the right number we have consulted with the Consumer Council for Water.
“We are grateful for our customers’ cooperation and patience over the last few weeks.”
The company said it would take until the end of September to ensure all customers affected had received their cheques, due to the scale of the operation.
“In addition to also receiving this automatic compensation payment, businesses that incurred extra costs or loss of earnings as a direct result of the boil water notice, will receive a separate letter on how to claim,” added Mr Dixon.
“We will review these on a case by case basis which will take longer but we will aim to deal with each as quickly and fairly as possible.”
Supplies started to return to normal on Thursday 27 August and since then more than two-thirds of households and businesses have had their boil water notice now lifted.