Urban water management will face various challenges in the future. Growing population in cities, changing climatic conditions and uncertain availability of water resources necessitate forward-looking water policy strategies. In this paper, we introduce a new water balance model to evaluate urban water strategies at a city scale. The aim is to evaluate decentralised water management measures within a large-scale investigation and to reduce external potable water demand. The upscaling process of local information (water demand, areal data) to a conceptual model approach is described. The modelling approach requires simplification of detailed processes to enable the execution with limited computing capacity. The model was applied to Greater Metropolitan Melbourne, Australia, a highly sprawled city with nearly four million inhabitants. Scenario analysis demonstrated the impact of using different water resources of different quality classes, the extensive implementation of water saving appliances and decentralised water storage strategies on the city’s water balance. Results indicate a potential reduction of potable water demand of up to 25% with a conservative rainwater reuse and, even 60% with widespread implementation of rain- and greywater recycling. Furthermore, we demonstrate that even small systems implemented at a local level can have noticeable effects when operated as clustered schemes.