In many parts of the world, growing demands for water are beginning to outstrip available supplies, and there is competition among users for available water. Sydney, the capital city of the state of New South Wales in Australia, is an example where urban water demands have reached the capacity of the existing water supply system. The New South Wales state government has introduced new water sharing rules that require increased water allocations for environmental flows to maintain river health, particularly in low flow periods. The government is introducing new planning measures to achieve 40% water savings in new houses compared to the current Sydney baseline. In the case of Sydney, the government has recently released a Metropolitan Water Plan that will enable Sydney to meet environmental flow requirements and cater to growth for the next 30 years. The new planning requirements significantly increase the opportunities to integrate water recycling into urban water supply systems to increase available supplies and minimise environmental impact. Amendment of the NSW guidelines for urban and residential use of recycled water to allow laundry use would bring down the cost of residential water recycling systems. An example is given as to how a water recycling network could be integrated into the new development areas in Sydney to improve drought security and the environmental outcome by using recycled water for multiple uses including urban, agricultural and environmental. The capital cost, water pricing and energy use implications of such a network are discussed.