A colorimetric protein phosphatase inhibition assay based on the dephosphorylation of phosvitin by recombinant protein phosphatase 1 was developed for analysis of waters for cyanobacterial hepatotoxins. The phosphate released in the assay was determined using a malachite green reagent. Good agreement with toxin concentrations determined by HPLC was obtained. The assay was capable of determining these toxins at concentrations around 1 microgram/L with high precision and without sample concentration. This is of considerable benefit as the World Health Organisation specifies a provisional guideline of 1 microgram/L for microcystin-LR. There was evidence, however, that the sample matrix might affect quantification, leading to false positive results. Thus the assay should be viewed as a screening procedure, and confirmatory analyses by an alternative procedure should be carried out for positive results. Further work is required to resolve the question of matrix interferences if phosphatase inhibition assays are used directly for measuring toxin levels in water, especially if this information is used to check compliance with water quality guidelines.