Suzhou City in east China's Jiangsu Province plans to spend 10 million yuan (US$1.25 million) this year to replace taps and toilets with water-saving ones.
The city made the decision as China aims to build a society that conserves water.
The replacement process will start in July while the investigation and registration process is underway, officials with the local government said.
Suzhou aimed to provide water-saving means for 40,000 households by the end of this year, and for all residents in three years.
China, with the largest population in the world of 1.3 billion, is facing water shortages as water per capita is 2,200 cubic meters, only 31 percent of the world's average.
Currently, about 400 out of 660 Chinese cities lack water and 136 have reported severe water shortages.
In the capital of Beijing, a water conservation campaign has helped the city save 100 million cubic meters of water per year, enough for 10,000 three-member families for four years.
(Xinhua News Agency March 18, 2006)