We present the first study of dipole and quadrupole moments of liquid water calculated using coupled cluster/molecular mechanics (COMM) methods. CUMM methods are used to calculate the total dipole moment of the water dimer and the results are compared to the corresponding ab initio quantum mechanical calculations. For liquid water we find that the introduction of polarization effects are very important for an accurate determination of dipole and quadrupole moments. Furthermore, we find that neglecting the correlation effects in the quantum mechanical part of the system leads to an overestimation of the interaction between the two sub-systems. (C) 2002 Elsevier Science B.V. All rights reserved.