Pressure groups have claimed that private companies are unlikely to provide the solutions for the millions of poor people without adequate clean water and decent sanitation.
By Tim Hirsch
BBC environment correspondent in Kyoto
Speaking on the third day of the Third World Water Forum in Japan, Water Aid and Tearfund hit out at international lending institutions such as the World Bank for their "obsession" with the private sector.
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The groups launched a report showing, they say, that international companies are not interested in working in very poor countries - and they argue that policy-makers need instead to focus on enabling local and central governments to serve the poor through working with local communities.
Eric Gutierrez of Water Aid said: "The international private sector currently only provides 5% of all the water services in the world, very largely in richer and more developed countries.
"The obsession with the private sector to provide clean water to those most in need is a total distraction. We must move on to stop the millions of needless deaths from water-related diseases."
Joanne Green from Tearfund added: "International policy-makers and institutions like the World Bank are misguided in thinking that the private sector will have any real impact on reaching the 1.2 billion poorest people in the world who lack access to safe water.
"The international community must stop arm-twisting countries to give access to private sector companies as a condition for receiving development aid, grants and loans."
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But the World Bank itself has hit back at its critics, claiming that it simply wished to encourage the most effective methods of delivering water services to the poor.
The bank's vice-president for sustainable development, Ian Johnson, told BBC News Online: "We have discussions with governments who have to determine what the right mix of public and private sector roles should be in delivering services, and then we work with them.
"We do not have an ideological prima facie position that says that we must force privatisation on anyone. We are not religious zealots when it comes to privatisation."