The water distribution system design problem consists of finding a minimum cost combination of network layout and sizes of system components so as to satisfy flow demands, minimum and maximum head requirements and a reliability criterion. A two step procedure is proposed to find a near optimal design. The first step considers obtaining a near optimal tree layout using a heuristic tree search algorithm. Two different methods are followed for the tree search - one for single source networks and the other for multiple source networks. The second step adds loop forming redundant links to the tree layout in such a way that every demand node has two paths from source node(s). The methodology is applied to a single source network and a multiple source network. In both the cases better results arc achieved than those obtained previously by other researchers.