adding water at any time will reduce the ABV, however you need to add after a measurement so you can calculate the ABV as per my example above. With regards to what other forumites have mentioned re: hydrometer readings. If the wort was not proberly stirred when taking the 1st reading it could be wrong if the sugars/malt weren't mixed in properly.
Thanks for the reply.
Believe me the wort was fully mixed. I have a very large whisk and spend around 10 mins whisking at 10L quantity. Has been said that airating at the start improves final taste... to be honest I do it for the work out.