The Authority came into existence as from the 1 July 1982 pursuant to Statute 36 of 1982. This Act was the result of a legislative review conducted since 1978 with the intention of gradual replacement of obsolete provisions of the 1909 legislation (No. 43 of 1909).

The new legislation provided that "subject to the Minister, the Authority shall be administered by a Board of Management to be known as the Metropolitan Water Board". The Board consisted of seven viceregal appointees three of whom were Authority employees, and four, external appointees. The Chairman was appointed by the Governor for five years. The property, powers, functions (etc) of the former Board were transferred to the Authority by the new Act.

Following the election of a Labor Government in February 1983, a steering committee was appointed to oversee the merger of the Authority and related water activities of the Public Works Department. The new omnibus organisation (i.e. the Water Authority of Western Australia) received legislative basis through the Water Authority Act of 1984. The new Authority commenced operations as from 1 July 1985.