The reservoir is gigantic, holding 140 trillion times the mass of water in the Earth's oceans, residing 10 billion light years away.
"Since astronomers expected water vapor to be present even in the early universe, the discovery of water is not itself a surprise," the Carnegie Institution, one of the groups behind the findings, said in a statement.
The water cloud was found to be in the central regions of a faraway quasar.
"Quasars contain massive black holes that steadily consuming a surrounding disk of gas and dust; as it eats, the quasar spews out amounts of energy," the Institution said.
The quasar is one of the most powerful entities in the universe, with this particular one pumping out 1,000 trillion times more energy than our sun, and 65,000 times the whole of the Milky Way.
The quasar where the gigantic water reservoir is located is some 12 billion years old, only 1.6 billion years younger than the Big Bang. It is older than the formation most of the stars in the disk of the Milky Way galaxy.
Because of the sheer distance from Earth, light from the event takes so long to reach researchers instruments that the data actually represents a snapshot into the past. It gives researchers a glimpse not only of interstellar phenomenon, but also the beginnings of the universe.
"These findings are very exciting," said Jason Glenn, a study co-author and a University of Colorado Boulder associate professor, in a statement.
The discovery was part of a larger study of the quasar named APM 08279+5255, where the black hole is 20 billion times greater than the sun. There researched found water vapor around the black hole extending hundreds of light-years in size.
Astronomers expected water vapor to be present even in the early, distant universe, but had not detected it this far away before.
There's water vapor in the Milky Way, although the total amount is 4,000 times less than in the quasar, because most of the Milky Way's water is frozen in ice.
"The environment around this quasar is very unique in that it's producing this huge mass of water. It's another demonstration that water is pervasive throughout the universe, even at the very earliest times.," said NASA scientist Matt Bradford.
Research on the discovery is slated to be published in a coming issue of Astrophysical Journal Letters.
NASA made their observations starting in 2008, using an instrument called "Z-Spec" at the California Institute of Technology's Submillimeter Observatory, a 33-foot (10-meter) telescope near the summit of Mauna Kea in Hawaii.
Follow-up observations were made with the Combined Array for Research in Millimeter-Wave Astronomy (CARMA), an array of radio dishes in the Inyo Mountains of Southern California
This discovery highlights the benefits of observing in the millimeter and submillimeter wavelengths, the astronomers say.
The field has developed rapidly over the last two to three decades, and to reach the full potential of this line of research, the astronomers -- including the study authors -- are now designing CCAT, a 25-meter telescope to be built in the Atacama Desert in Chile.
CCAT will allow astronomers to discover some of the earliest galaxies in the universe. By measuring the presence of water and other important trace gases, astronomers can study the composition of these primordial galaxies.
Astronomers and scientists from the Jet Propulsion Laboratory, the California Institute of Technology, the University of Maryland, the University of Colorado, the University of Pennsylvania, and the Institute for Space and Astronautical Science in Japan were involved.
The research team was comprised of a wide array of international talent. The Carnegie Institution's Eric Murphy headed up the study.
Funding for Z-Spec was provided by the National Science Foundation, NASA, the Research Corporation and the partner institutions.