In this study, multivariate statistical investigation and calculation of water quality index was made to analyze the water quality at seventeen sampling stations along the man made irrigation channel called Eluru canal originating at tail end of River Godavari. Eleven parameters were analyzed as per the standard procedures of Drinking water specification (Indian standards) during pre-monsoon, monsoon and post-monsoon seasons and were used to calculate Weighted Arithmetic Water Quality Index. The status of the index was found really poor in all the seasons. The data matrix (17x11) was very difficult to reveal the internal patterns. In the present study, Cluster Analysis was found to be useful for sampling strategy to locate spatial variations in water along the stream. It has formed two big clusters grouping seventeen stations. Similarly, Principal Component Analysis revealed that the underlying factors responsible for pollution were especially salts. Discriminant Function Analysis was very helpful in identification of the contribution of pH and Bio-chemical oxygen demand to index as a whole. Thus these techniques were found useful to reduce the voluminous data and identify the optimal rule for selection of sampling stations and variables. It helps for effective water quality supervision.