To estimate the impact of the improvement of water supply. a comparative study on water collection and household expenditure on water was conducted between a former squatter community with an improved water supply (Leveriza: LE) and a typical squatter community with public water faucets (Maestranza: MA) in Manila, the Philippines. Data were collected from 201 structured household interviews and a focus group discussion among housewives in each community. To measure the time spent collecting water, observations of private and public water faucets were conducted. The residents in LE enjoyed significantly larger quantities of water from private water connections than in MA, where only three public water faucets were available as a water source. Conversely, the unit price of water in LE was much lower than in MA. In LE, 72.1% of the households started working for more income using time saved through the improvement of water supply and the proportion of the households under the poverty threshold was reduced from 55.6% to 29.9%. In MA, 68.6% of the households expressed their willingness to work for more income when time spent collecting water was saved. It would be possible for MA to reduce the proportion of the households under the poverty threshold through the improvement of the water supply. The results of the study indicated that the improvement of water supply would possibly encourage urban slum residents to increase their household incomes through reallocating time saved to income-generating activities. The underserved residents spent more money for less water compared to those with access to private water connections. In MA, it took 3-4 h, on average, to complete one water collecting task, even though the nearest public water faucet was within 100 m of any housing unit. This suggests that the definition of accessibility to safe water be reconsidered when discussing the urban poor.