BACKGROUND. In arid and semi-arid countries there are often large areas where groundwater is brackish and where people have to obtain water from irrigation canals for all uses, including domestic ones. An alternative to drawing drinking water directly from irrigation canals or village water reservoirs is to use the water that has seeped from the irrigation canals and irrigated fields and that has formed a small layer of fresh water on top of the brackish groundwater. The objective of this study was to assess whether use of irrigation seepage water for drinking results in less diarrhoea than direct use of irrigation water and how irrigation water management would impact on health. METHODS. The study was undertaken in an irrigated area in the southern Punjab, Pakistan. Over a one-year period, drinking water sources used and diarrhoea episodes were recorded each day for all individuals of 200 households in 10 villages. Separate surveys were undertaken to collect information on hygiene behaviour, sanitary facilities, and socio-economic status. RESULTS. See page water was of much better quality than surface water, but this did not translate into less diarrhoea. This could only be partially explained by the generally poor quality of water in the in-house storage vessels, reflecting considerable in-house contamination of drinking water. Risk factors for diarrhoea were absence of a water connection and water storage facility, lack of a toilet, low standard of hygiene, and low socio-economic status. The association between water quality and diarrhoea varied by the level of water availability and the presence or absence of a toilet. Among people having a high quantity of water available and a toilet, the incidence rate of diarrhoea was higher when surface water was used for drinking than when seepage water was used (relative risk 1.68; 95% CI 1.31-2.15). For people with less water available the direction of the association between water quality and diarrhoea was different (relative risk 0.80; 95% CI 0.69-0.93). This indicates that good quality drinking water provides additional health benefits only when sufficient quantities of water and a toilet are available. In a multivariate analysis no association was found between water quality and diarrhoea but there was a significant effect of water quantity on diarrhoea which was to a large extent mediated through sanitation and hygiene behaviour. CONCLUSIONS. Increasing the availability of water in the house by having a household connection and a storage facility is the most important factor associated with reduced diarrhoea in this area. Safe use of canal irrigation water seems possible if households can pump seepage water to a large storage tank in their house and have a continuous water supply for sanitation and hygiene. Irrigation water management clearly has an impact on health and bridging the gap between the irrigation and drinking water supply sectors could provide important health benefits by taking into account the domestic water availability when managing irrigation water.