Lack of available surface water resources and increasing depletion of groundwater are the major challenges of urban water systems (UWSs) in semi-arid regions. This paper presents a long term multi-objective optimisation model to identify optimal water allocation in UWS. The objectives are to maximize reliability of water supply and minimize total operational costs while restricting the annual groundwater withdrawal. Pumping water from a dam reservoir and water recycling schemes are two alternatives for supplying water to increasing water demands over the planning horizon. The developed approach is demonstrated through its application to the UWS of Kerman City in Iran. The Pareto-optimal solutions are obtained as a trade-off between reliability of water supply and operational costs in the Kerman UWS. The results show that addition of recycled water to the water resources can provide the least cost-effective and most efficient way for meeting future water demands in different states of groundwater abstractions.