The paper will review current thinking and practice on the provision of subsidies to connect to and use water services. Whilst the concentration is on water, the discussions address how public services can be provided effectively within the constraints of the market and with ambitious poverty reduction targets. The paper begins by briefly reviewing current objectives for water service providers and the changing attitudes to subsidies in the recent past. The discussion then moves on to consider strategies that have been used to offer and manage subsidies. Section IV considers some of the ways in which such subsidies have been financed while the penultimate Section examines ways of assessing the success or otherwise of subsidy strategies. The final Section concludes.