Classifying surface cover types and analyzing changes are among the most common applications of remote sensing. One of the most basic classification tasks is to distinguish water bodies from dry land surfaces. Landsat imagery is among the most widely used sources of data in remote sensing of water resources; and although several techniques of surface water extraction using Landsat data are described in the literature, their application is constrained by low accuracy in various situations. Besides, with the use of techniques such as single band thresholding and two-band indices, identifying an appropriate threshold yielding the highest possible accuracy is a challenging and time consuming task, as threshold values vary with location and time of image acquisition. The purpose of this study was therefore to devise an index that consistently improves water extraction accuracy in the presence of various sorts of environmental noise and at the same time offers a stable threshold value. Thus we introduced a new Automated Water Extraction Index (AWEI) improving classification accuracy in areas that include shadow and dark surfaces that other classification methods often fail to classify correctly. We tested the accuracy and robustness of the new method using Landsat 5 TM images of several water bodies in Denmark, Switzerland, Ethiopia, South Africa and New Zealand. Kappa coefficient, omission and commission errors were calculated to evaluate accuracies. The performance of the classifier was compared with that of the Modified Normalized Difference Water Index (MNDWI) and Maximum Likelihood (ML) classifiers. In four out of five test sites, classification accuracy of AWEI was significantly higher than that of MNDWI and ML (P-value < 0.01). AWEI improved accuracy by lessening commission and omission errors by 50% compared to those resulting from MNDWI and about 25% compared to ML classifiers. Besides, the new method was shown to have a fairly stable optimal threshold value. Therefore, AWEI can be used for extracting water with high accuracy, especially in mountainous areas where deep shadow caused by the terrain is an important source of classification error.