We present an accurate free-energy functional for liquid water written in terms of a set of effective potential fields in which fictitious noninteracting water molecules move. The functional contains an exact expression of the entropy of noninteracting molecules and thus provides an ideal starting point for the inclusion of complex intermolecular interactions which depend on the orientation of the interacting molecules. We show how an excess free-energy functional can be constructed to reproduce the following properties of water: the dielectric response; the experimental site-site correlation functions; the surface tension; the bulk modulus of the liquid and the variation of this modulus with pressure; the density of the liquid and the vapor phase; and liquid-vapor coexistence. As a demonstration, we present results for the application of this theory to the behavior of liquid water in a parallel plate capacitor. In particular, we make predictions for the dielectric response of water in the nonlinear regime, finding excellent agreement with known data.