K.
SHe doesn't need water - she's just used to it. You can gradually phase this out by decreasing the amount you give her each night (by 1 oz or so). It's actually likely that her drinking is keeping her awake because she gets wet when she drinks a lot at night. As soon as I stopped my son from drinking a lot of bath water at night - right around 12 months old - he immediately started sleeping through the night.