Anglian Water has not kept to conditions when carrying out works in Norwich Road, Suffolk Highways has said.
The roadworks have led to delays in the north of Ipswich town centre, but Suffolk County Council says that conditions were applied that required the temporary traffic control to be manually controlled - and that this was not adhered to.
This has led to Anglian Water being fined for an undisclosed amount.
A spokesperson for Suffolk Highways said: "The road works taking place at the junction of Norwich Road/Orford Street in Ipswich are being carried out by Anglian Water.
"Conditions are often applied to permits to help lessen the disruption caused, in this case we asked for the temporary traffic lights to be manually controlled.
"This was not adhered to, and has been dealt with directly, with fines being issued. The site will be monitored regularly, and any further issues will be managed."
An Anglian Water spokesman commented: "There are a large number of organisations currently working in and around Norwich Road including ourselves.
"We set up manual traffic lights for our work yesterday and were initially controlling these during peak times, however following conversations with the council today it has been acknowledged by our team that this is needed continuously throughout the day to ensure traffic continues to flow in the area that we are working."
The work is expected to be completed on Friday, February 4.
Businesses around the area have said that the traffic issues - caused by multiple roadworks in the area, from Anglian Water and City Fibre - have affected deliveries, access to car parking and customer appointments.
Jonathan Williamson, director of Wines of Interest, said that traffic outside of the shop in Burlington Street had been brought to a standstill for hours, adding: "The constant barrage of roadworks throughout our town certainly makes being in business here significantly less attractive.
"One might hope that our local authorities and utility providers might work more closely to ensure that disruption is kept to a minimum. No doubt they would claim that they do this already, but we see no signs of it."
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