Unsafe water and inadequate sanitation spread fatal and debilitating diseases which affect millions of lives in the developing world. The United States has been concerned with this problem for over 40 years. Between fiscal years 1978 and 1982, AID provided over $161 million in Development Assistance for directly meeting the need for these services, mainly in rural areas. AID has been successful in expanding access to improved water and better sanitation. GAO notes problems, however, with delivering the full range of the intended facilities and services and implementing operation and maintenance activities which are critical to long-term success. Also, AID is not identifying the immediate benefits derived from the projects. GAO makes recommendations for improving implementation, ensuring that the projects receive proper upkeep, and identifying the improvements resulting from this type of assistance. AID has steps underway or planned which should implement GAO's recommendations. (Author abstract).