This study assessed whether availability of water for domestic use had any impact on nutritional status of children in an area where people depend on irrigation water for all their domestic water needs. During May 1998-April 1999, data on the occurrence of diarrhoea among 167 children aged less than five years were collected from 10 villages in the command area of the Hakra 6R canal in southern Punjab, Pakistan. Anthropometric measurements were taken at the end of the study period. Additional surveys were conducted to collect information on the availability of water, sanitary facilities, hygiene, and socioeconomic status. Height-for-age and longitudinal prevalence of diarrhoea were used as outcome measures. Quantity of water available in households was a strong predictor of height-for-age and prevalence of diarrhoea. Children from households with a large storage capacity for water in the house had a much lower prevalence of diarrhoea and stunting than children from families without this facility. Having a toilet was protective for diarrhoea and stunting. Increased quantity of water for domestic use and provision of toilet facilities were the most important interventions to reduce burden of diarrhoea and malnutrition in this area. An integrated approach to water management is needed in irrigation schemes, so that supply of domestic water is given priority when allocating water in time and space within the systems.