The Palm Island council last week asked the organisation to deliver water to the north Queensland indigenous community amid fear supplies were unlikely to last more than a month.
The council also lodged a request asking the island be closed to visitors to preserve water, which the state government refused.
Premier Peter Beattie described the transportation of extra bottled water to the island as unnecessary because figures provided to the Department of Natural Resources and Mines by council officers indicated there was three months supply left on the island.
Palm Island's Mayor, Erykah Kyle, was also accused of over-reacting to a water shortage on the island and has since been silenced by her council.
But Red Cross Queensland executive director Greg Goebel said workers on the island believed there was a genuine need for extra water.
"A priority is going to be to mothers and young babies - they're the ones who probably need good, clean drinking water more than anybody else," he told ABC Radio.
"But we're monitoring the situation. We've been talking to the health authorities over there as well and some other community groups, so our staff are going to play it day by day."
The government said a program was in place to financially assist Palm Island council in the transportation of bulk emergency water to the island if required.
Financial assistance was also available to undertake investigations to help improve the island's current water supply.
Locals have claimed poor water quality was causing boils in their children, but the Red Cross dismissed reports of an outbreak as "rumours".