Industrial revolution and rapid population growth are responsible for alteration of land into different settlements. These changes may lead to change in land use (LU) and land cover (LC). The LULC changes have impact on hydrological regimes including streams flow pattern and allocated irrigation water (water allocation through Warabandi system). The present study aimed to identify the LULC changes and settlement impact on allocated water using the unsupervised classification and normalized difference vegetation index (NDVI) of Landsat images for the years of 1990 to 2020 in Multan District. The accuracy assessment and Kappa coefficient were also investigated to evaluate quality of results derived from the classified images. The results show that the reduction in waterbody, spare, and dense vegetation was -7.6, -1.7, and -30.7%, respectively. The settlements, barren, and crop lands have increased to 25.2, 10.1, and 4.6%, respectively, from 1990 to 2020. The values of kappa coefficient (0.84-0.85) showed very good level of classification. In addition, the volume of water loss due to change of LULC from waterbody into settlements, barren land, crop land, spare, and dense vegetation was found approximately 472, 44, 133, 54, and 85 m3, respectively, in last 30years. This volume of water is not reaching equitably to the farming community because of the LU and LC changes and urban settlements. The results indicated that remotely sensed image interpretation technique may be a useful for reallocation of water among farmers in an equitable and efficient way.