The article details the development and uses of the water poverty index (WPI). The index was developed as a holistic tool to measure water stress at the household and community levels, designed to aid national decision makers, at community and central government level, as well as donor agencies, to determine priority needs for interventions in the water sector. The index combines into a single number a cluster of data directly and indirectly relevant to water stress. Subcomponents of the index include measures of: access to water; water quantity, quality and variability; water uses (domestic, food, productive purposes); capacity for water management; and environmental aspects. The WPI methodology was developed through pilot projects in South Africa, Tanzania and Sri Lanka and involved intensive participation and consultation with all stakeholders, including water users, politicians, water sector professionals, aid agency personnel and others. The article discusses approaches for the further implementation of the water poverty index, including the possibilities of acquiring the necessary data through existing national surveys or by establishing interdisciplinary water modules in school curricula. The article argues that the WPI fills the need for a simple, open and transparent tool, one that will appeal to politicians and decision makers, and at the same time can empower poor people to participate in the better targeting of water sector interventions and development budgets in general.