Rainwater tanks have been recognised as alternative source of water supply in Greater Melbourne, Australia. Rainwater tanks benefits included not only water savings for households but also in water supply systems and in flood mitigation. Analysis of 4000 households who availed the Victorian Government Rebate Scheme and another 4000 households who did not install rainwater tanks revealed that rainwater tanks contributed to the 42.5% reduction in average household annual water consumption. The results also show that rainwater tanks with indoor plumbing have longer payback period than those solely for outdoor purposes due to higher capital and operating costs even with higher rebates from the government. It was also revealed that the tank size greater than 4500 had the highest NPV and a lowest levelised cost of water of 9cents/kl. The effect of household rainwater tanks on the diurnal patterns of water usage and on peak demand factors were also investigated on100 households whose water consumption were monitored by Yarra Valley Water at 5-minute interval. Analysis of the data revealed that water usage of households with rainwater tanks is lesser than households without. The diurnal patterns showed almost the same peak in the morning due to non consumption from rainwater tanks. However the afternoon peak is lower in households with rainwater tanks due to garden watering from rainwater tanks. In terms of flood mitigation, rainwater tanks resulted to peak flow reductions, downstream water quality improvements and reduction in the total annual volume of stormwater leaving the catchment. Recorded on 14 August 2015.