A £3bn rescue loan for Thames Water is set to go ahead after an appeal against the deal was dismissed.

The troubled firm secured the rescue loan in February, to stave off the prospect of the debt-laden company coming under government control.

But a small group of lenders had argued against the terms of the deal, while Liberal Democrat MP Charlie Maynard had argued that extra lending was not in the public interest.

This extra funding allows the UK’s largest water company to continue operating for at least another 12 months giving it time to restructure its nearly £20bn in debt and try to attract new investment.

Thames Water serves about a quarter of the UK’s population, mostly across London and parts of southern England, and employs 8,000 people.

The Court of Appeal said it would issue written reasons for its decision to dismiss the appeal “in due course”.

Thames Water chief executive Chris Weston said he was pleased with the decision.

“We remain focused on putting Thames Water onto a more stable financial foundation as we seek a long-term solution to our financial resilience,” he said, adding that the firm’s “turnaround plan” can continue.

He added the initial tranche of £1.5bn would be provided in instalments over the coming months.

Opponents of the rescue plan, including Mr Maynard, argued it mainly served the interests of Thames’s current lenders who stood to lose more of their money in an administration than they would if they could keep the company running.

They argued the public interest would best served by putting Thames under government control through a Special Administration Regime, which was the same mechanism employed when energy company Bulb went bust.

Critics of the deal also argued the 9.75% interest rate attached to the new debt made it too expensive an option for Thames.

Responding to the Court of Appeal’s decision, Mr Maynard said: “Thames Water remains a cash cow for its lenders, while its 16 million customers are left to foot the bill for the company’s ludicrously expensive interest charges and advisory fees.

“It is in the government’s power to end this now for the benefit of the British public and seek to put the company into special administration.”

The BBC understands Mr Maynard is still considering whether to appeal against the latest ruling to the Supreme Court.

A spokesperson for the group of Thames Water’s creditors who opposed the plan said they “disappointed” with the Court of Appeal’s dismissal.

“We will continue to explore all available avenues, including seeking leave to appeal to the Supreme Court, to ensure that customers and the broader public are not forced to bear the costs of a deeply flawed restructuring process.”

Thames Water was set to run out of cash by the end of March and without the loan it was likely to have been placed into temporary nationalisation to keep services running.

Many UK water companies have large debts, but Thames Water’s problems are the worst, with debts of about £19bn.

It has faced heavy criticism over its performance in recent years following a series of sewage discharges and leaks, and needs to spend billions on upgrading the water network.

The company had insisted that if the rescue deal was blocked, a government rescue would have cost taxpayers billions, as well as setting back the timetable to fix the business.

Thames Water customers are facing a 31% increase in their bills from April, and Monday’s ruling will not affect this.