Thousands of broadband users who were hit with bills despite cancelling their service have received £2.5 million in compensation.
The refunds and goodwill payments were made to 62,000 customers after regulator Ofcom took action against TalkTalk and its Tiscali UK subsidiary following the receipt of more than 1,000 complaints relating to incorrect bills.
The watchdog is still receiving complaints and warned it could issue TalkTalk with a fine if it found evidence that the firm had continued to breach regulations.
TalkTalk has been dogged by customer service problems following its takeover of rival Tiscali's UK business in 2009.
Among the billing errors, one customer received bills for £109.77 from TalkTalk after she switched to another provider. Another customer paid Tiscali UK £610 despite cancelling her account in February 2006, after being sent bills from debt collection services.
Under chief executive Dido Harding, TalkTalk has created a central support team to improve service quality and rectify the problems. It said: "We're pleased that Ofcom has recognised the significant steps we've taken to fix the billing issues identified.
"We moved all of our customers to our single billing platform at the end of January and our focus on resolving any outstanding billing issues continues. We remain committed to providing great value and service to our 4.2 million phone and broadband customers."
Ofcom launched an investigation into TalkTalk in July which led to it giving the company a deadline of December 2 to remedy the breach in regulations and pay refunds to customers.
It ordered TalkTalk to provide refunds to all consumers who were billed for cancelled services since January 1 2010, cancel debt collection action and take steps to repair the credit ratings of affected customers.
Because TalkTalk had taken significant steps to fix the problem within the deadline, Ofcom said it could not fine the company for the original offences. But it can take additional action against TalkTalk, including a possible fine, if it finds evidence of a further breach of the rules.