* npower must resolve billing problems by end of August
* Failure to meet monthly targets will see end to telesales
LONDON, June 19 British energy supplier npower must resolve problems with late bills or halt telesales activity, UK energy watchdog Ofgem said on Thursday.
Ofgem started an investigation into npower's late billing of customers after 1.4 million complaints were received last year.
The company, which is the UK arm of German utility RWE , said at the time that the customer service problems had been caused by the introduction of a new computer system.
Although npower has made progress by clearing many of the oldest cases, its recovery plan has not been delivered as widely and as fast as necessary, Ofgem said.
"Ofgem is requiring npower to resolve major billing issues no later than the end of August 2014 and publish monthly progress updates on its website," the regulator said in a statement.
"Failure to meet monthly targets will result in npower ceasing all proactive telesales to new customers until they are met," it added.
Npower said this week that it had assigned an extra 650 people since December to help resolve customer service problems and would invest an additional 20 million pounds ($34 million)this year to fully resolve those issues. ($1 = 0.5904 British Pounds) (Reporting by Nina Chestney; Editing by Mark Trevelyan)