Water efficiency gains have been incorporated as an integral component of the long-term water supply strategy for Perth, Western Australia. This paper describes the development of the proposed water efficiency program for Perth which would reduce the need for additional water supplies by about 23%. The principles and approach used to develop the program are outlined and the economic evaluation of program options presented. The elements of the proposed program and associated research and development are described. Features of the program are an emphasis on water industry participation and structural changes to water use patterns.