Engineers have repaired a crucial water pumping station in the Iraqi capital serving almost a million people which had been bombed, the International Committee of the Red Cross says.
Lack of power and running water added to the chaos, residents said
Most Baghdad residents now have access to running water.
Efforts are under way to restore the electricity supply which was cut at the beginning of this month, the Red Cross said.
Ensuring that basic public services are restored quickly is being seen as critical to reducing suffering for the civilian population in the wake of the US-led invasion.
There have been almost daily demonstrations in Baghdad calling on US marines occupying the city to restore law and order.
The BBC's Richard Galpin in Baghdad says some progress has been made, with troops guarding vital installations and patrolling more frequently to discourage looters.
The Iraqi police force has also been revived this week and is out on the streets with the marines.
It is still not clear why Baghdad's power supplies were cut earlier this month, but increasing numbers of staff at power plants are returning to work and transmission lines damaged during the war are being fixed.
Our correspondent says there are hopes that there will be some mains electricity - critical not least for the hospitals - in the city within the next few days.
In other developments:
Queen Rania of Jordan has urged the US-led coalition to provide immediate secure access to Iraq for aid agencies and allow to airlift injured Iraqis for treatment abroad.
- UN aid workers in Cyprus say they are still waiting for the go-ahead from coalition troops to re-enter northern Iraq and launch a humanitarian relief programme
- Convoys of aid supplied by the government in Amman and the UN food agency head for Iraq via the Jordanian border
- Six international NGOs join forces in a co-ordinated effort to prevent a humanitarian crisis and plan a work-for-food programme to encourage hospital staff to return to work, organisers say,
Red Cross spokesman Florian Westphal said recent measures adopted by the coalition forces had improved security in Iraq's main cities, but the situation remained volatile.
We don't need big Hercules full of supplies, we have a crisis of governance - institutions that have stopped working
But Mr Westphal told BBC News Online it was too early to judge whether the coalition was meeting its requirements under the Geneva Convention to provide humanitarian aid and maintain order.
The US has set up a up a civil-military operations centre in Baghdad to deal with urgent humanitarian issues.
Mr Westphal also said the water distribution situation also remained critical in Iraq's second city, Basra, although a water treatment plant in the city was functioning.
"People are literally banging up holes (in water mains) to get water," he said.
But the head of the International Committee of the Red Cross in southern Iraq said relief convoys were not the answer.
"We don't need big Hercules full of supplies, we have a crisis of governance - institutions that have stopped working," Andres Kruesi, was quoted by the French news agency AFP as saying.