A procedure is presented for optimization of large-scale water supply network systems. Pipeline costs and energy costs are considered in the optimization. The optimization problem is solved through an iterative procedure in which the diameter of each pipe sequentially is adjusted according to the ratio between marginal pipeline and energy costs. The procedure is applicable to branched as well as to looping networks. No rounding of diameters are required since available dimensions are used directly in the optimization. The procedure assumes that all nodal inflow and outflow requirements are known and that minimal service pressure requirements are specified. The procedure has been implemented and has been successfully applied to economic optimization of several large-scale water supply problems.