AbstractSupply of water for cities and for food production will not be a major factor limiting the growth of Australia's population in coming decades. The water needed to sustain the population of Australia can be divided into two kinds. Direct water requirements are those that meet the immediate needs of the people – potable water supply and waste removal. Indirect water requirements refer to the water needed to sustain the economy and the standard of living – food production, manufacturing, mining, etc. Agriculture is the largest indirect user, using between 50% and 70%, while household use, including sewerage and drainage, uses less than 30%. Industry uses the remaining 20%. In this paper, we do not deal with the issue of water quality but note its significance, especially as regards the salinisation of water resources in rural Australia. Australia has abundant water when expressed on a per capita basis, although this is unevenly distributed around the continent. Per capita, the densely populated south‐eastern and south‐western parts of the continent have low to average run‐off available when compared with other populated regions of the world. What is more important is the extreme inter‐annual variability of that run‐off. Previous attempts to measure the size of the population that could be supported in Australia, based on the availability of water, have produced estimates up to 280 million. Outside of the well‐watered edges of the continent, water has always been seen as a factor that limits Australia's population. However, water supply is a necessary but not sufficient basis for population growth, as can be seen from examples (such as the Ord Irrigation Scheme) where providing abundant water has failed to trigger major population growth. The largest increases in population in coming decades are predicted to occur in the capital cities where there has been a substantial reduction in water use through demand management in recent years. Urban water demand has proven to be extremely elastic. New sources of urban water, including desalination, groundwater, recycled sewage, and increased run‐off in urban stormwater, will easily provide sufficient water for a growing urban population over coming decades. Water used in irrigated agriculture at present supplies the needs of Australia's 20 million people and an estimated 40 million in other countries. With increased efficiency in the delivery and use of water for irrigation combined with export substitution, water for food production is not likely to limit population. In this paper, we have not dealt with the issue of environmental flows in rivers or with the provision of water to wetlands, although we acknowledge that they are both significant issues for policy development. We conclude that the size of the population of Australia is less important than how that population behaves in regard to the management of water resources.