This work presents an algorithm for real-time fault detection in the SCADA system of a modern water supply system (WSS) in an Italian alpine valley. By means of both hardware and analytical redundancy, the proposed algorithm compares data and isolates faults on sensors through analysis of residuals. Moreover, the algorithm performs a real-time selection of the most reliable measurements for the automated control of the WSS operations. A coupled model of the hydraulic and remote-control system is developed to test the performance of the WSS when the proposed algorithm is applied or not. Simulations show that the occurrence of errors in the sensors causes significant worsening in the economic, energy and mechanical performance of the infrastructure. In many cases, the operations of the WSS are seriously compromised. The error detection and measurement assessment performed by the proposed algorithm proves to be crucial for the safe control of the WSS.