In areas lacking substantial freshwater resources, the utilisation of alternative water sources, such as desalinated seawater and reclaimed water, is a sustainable alternative option. This paper presents an optimisation approach for the integrated management of water resources, including desalinated seawater, wastewater and reclaimed water, for insular water deficient areas. The proposed mixed integer linear programming (MILP) model takes into account the subdivided regions on the island, the subsequent localised needs for water use (including water quality) and wastewater production, as well as geographical aspects. In addition, the integration of potable and non-potable water systems is considered. The optimal water management decisions, including the location of desalination, wastewater treatment, and reclamation plants, as well as the conveyance infrastructure for desalinated water, wastewater and reclaimed water, are obtained by minimising the annualised total capital and operating costs. Finally, the proposed approach is applied to two Greek islands: Syros and Paros-Antiparos, for case study and scenario analysis. (C) 2011 Elsevier Ltd. All rights reserved.