Water for irrigation is the limiting resource for cotton production in Australia. While this has been recognised by the cotton industry for at least the last twenty years, the Australian Water Reform Agenda of the last five to ten years has heightened the importance of high water use efficiency. Cotton growers in New South Wales and Queensland have suffered a significant reduction in water allocation from both surface and groundwater resources since the mid 1990s. Both the research and commercial sectors of the industry have increased focus on water use efficiency issues in the last five to ten years but significantly more needs to be done. Storage and conveyance of water from government and private scheme to the farm gate, storage and conveyance on-farm, application of irrigation and the return and storage of tailwater all need to minimise losses. Fortunately with defined water allocation security, improvements in efficiency should result in increased production per megalitre for the irrigator along with improved environmental performance