The revision of the Drinking Water Directive (DWD), which the process of consultation by the European Parliament is coming to the end, includes a commitment for all Member States to assess the level of water leakage. The overarching aim of this action is to reduce water loss through leaks. In regard to this, use of performance indicators as suitable to enable assessment of water utility performance with regard to leakage reduction, including impacts on environment and cost-efficiency, is recommended. The paper provides results from water losses evaluation with the set of performance indicators (PI), considering dependence on the availability of resources and specific operating conditions. An analysis of different PI that are necessary to evaluate in most of leakage reduction methods was conducted considering step-by-step approach. Furthermore, the most relevant data for leakage analysis and management on a network level was determined. Presented PI can be used to improve leakage management of small water supply system. Similarly as in the Deming cycle, the described tool provides for planning activities, executing activities in accordance with the plan, checking the degree of execution of objectives included in the plan, and on the basis of conducted analyses and lessons learned, the so-called improvement. The results of the analysis lead to the conclusion that through a comprehensive, systematically improved strategy, the high effectiveness of the system could be reach. The reliable monitoring does not have to be based on advanced technological methods, which are often unavailable for small water supply system, due to high investment and operating costs. The results indicate that integrated IT systems, as SCADA, might not be directly beneficial to water loss management in small networks with moderate leakage levels.