The contest, called the Drawing Water Challenge, is worth £3,000 to the winning team.
It was launched by Arup and follows its Drawing Water exhibition, which held a charity auction selling hand-drawn postcards by well-known architects.
According to the engineering giant, roughly one-sixth of the world's population does not have access to water that is safe to use and two-fifths lives without proper sanitation.
To combat this, Arup is calling for designers to submit proposals for 'a new concept, technology, innovative approach or product' to bring clean water to those without.
The competition states that all proposals should be clearly feasible and original, which will support the aims of Arup charity partner WaterAid.
The competition's runner-up scoops £2,000 and the third-placed team takes home £1,000, donated by Arup, as part of the company's Arup Cause charity initiative.
The entries will be judged by a panel including Arts Council chairman Christopher Frayling and MAKE's Ken Shuttleworth.
The deadline for entries is 5pm on 31 January 2007. Proposals should be submitted via email to firstname.lastname@example.org. The winner will be announced in February.