The major objective of this study is to estimate household willingness to pay for improvedrnsustainable water supply services, and to investigate its determinants in Addis Ababa cityrnof Ethiopia, by using contingent valuation method with a single bounded elicitationrnformat followed by open ended questions. A total of 375 randomly selected samplernhouseholds were interviewed, both probit and linear regression of ordinary list squarernmodel were used to analyze the determinants of households willingness to pay forrnimprovement of water supply services and A mean willingness to pay is found to be 2.78rnbirr per one bucket or 20 liter of jerican in the probit result and mean willingness to payrn2.01 birr in the open ended format result. Householdâ€™s monthly income, sex of householdrnhead, family size of household and reliability of water services have positive andrnsignificant effects on willingness to pay for improved water supply services in the probitrnmodel. On the other hand, initial bid price and age of house hold head have negative andrnsignificant effect on the probability of willingness to pay for improved water supplyrnservices. The contingent valuation survey result revealed that 323(86.1%) of householdrnheads were found willing to pay additional fee for improved water services. This impliesrnthat if proposed water improvement scheme is implemented, in addition to satisfying thernwater needs of households of the cityâ€™s utility management can collect more revenue fromrnthe sale of improvement water. If provision of improved water supply service will appliedrnto the city of Addis Ababa water and sanitation authority will collect 286,693,205.50 birrrnadditional revenue. Therefore, the concerned body needs to take in to consideration thernsocio economic and demographic factors like sex, age, marital status, income,rneducational status and marital status in designing the improved water supply system ofrnthe city.