This paper deals with practical problems of leak detection by methods based on hydraulic transient analysis. Controlled and safe transients can be generated and the response of the network, with the relevant information, can be monitored and analysed. Information about leaks, contained in the monitored pressure signal, cannot be easily retrieved, due to reflections, noise etc. On the basis of numerical experiments on a simple network, merits and limitations of several methods for signal analysis (time domain analysis, spectral density function and wavelet transform) have been examined. Certain amount of information can be extracted from the time history of the pressure signal, assuming the first reflection of the pressure wave is captured with very high time resolution and accuracy. Only relatively large leaks can be detected using this methodology. As a way to increase the sensitivity of this method it is suggested that transforms in frequency domain and, especially, wavelet transforms, are used. The most promising method for leakage location and quantification seems to be based on wavelet analysis.