Microorganism-mediated degradation of water quality is a major public health concern in developing countries. Previous literature has shown an association between household water pollution and childhood diarrhoea; however, its effects on child growth, respiratory health, and infant mortality have not been widely investigated. This study assesses the impact of household drinking water contaminated with Escherichia coli (E. coli) on child’s weight-for-height and weight-for-age z-scores, acute respiratory infections (ARI), and diarrhoea incidence among five years children, and on infant mortality rate (IMR) in Pakistan. We use district-level geospatial information and the latest waves of unique Multiple Indicator Cluster Survey (MICS) data containing information on ‘point-of-service delivery’ (POS) and ‘point-of-consumption’ (POC) water quality, collected for the first time on a large scale in Pakistan. We employ an instrumental variable approach to address potential endogeneity issues in household drinking water quality, finding that POC drinking water contamination significantly affects children’s weight-for-height and weight-for-age z-scores and diarrhoea but insignificantly affects ARI and IMR. The effects of contaminated water are found to be particularly significant in children older than 6 months of age and an insignificant effect is observed for younger children. To protect the children from growth failure and contracting diarrhoea, household water quality should be improved.