The Water Services Association of Australia, in its annual report card on the state of cities' water supplies, has found more money is being spent than ever before.
The association's executive director Ross Young said the long-term goal of the water supply industry was to put an end to permanent water restrictions by securing new sources of water.
"Good water saving rules and water conservation programs will always be the backbone of water resource strategies for our cities, but that doesn't necessarily equate to restrictions," he told reporters.
"Into the longer term the objective is that there shouldn't be harsh water restrictions on an ongoing basis for Australian cities."
Young said that the combination of climate change and population growth was driving a boom in water infrastructure.
"The combination of climate change and population growth means that we really do need to develop new sources of water as well as continue to introduce water conservation programs," he said.
The atypical rainfall patterns associated with climate change are causing a change in the approach to water supply with large dams playing less of a part in modern city water supply planning.
"Dams are becoming an increasingly unreliable source of water in an era of climate change and that's why the answer to our current problems isn't building new dams," Young said.
The practice of recycling waste water for human consumption is becoming more popular with the amount of waste water recycled for human consumption more than doubling since 1999.
Young said that people were starting to realise the benefits of recycling waste water.
"I think that the tide has turned and there is growing acceptance that recycled water could become an important source of water in the future," he said.
According to the report, much of the country's water infrastructure is over 50 years old and in need of an overhaul.
Young said that $5 billion would be spent over the next five years to improve this ageing infrastructure.
"Many of these assets are more than 50 years old and require ongoing maintenance and timely replacement," he said.
"Over the five years to 2013, the urban water utilities will invest around $5 billion in replacing old assets."
Major projects on the association's books include desalination plants at Kurnell in Sydney, at Wonthaggi in Victoria, and at Binningup south of Perth.
