The phase behaviour of aqueous solutions of poly(ethylene oxide), PEO, is analysed by means of a structural model of the system and a simple statistical-mechanical model based thereupon. The intention is to elucidate the structural questions involved in the water–PEO coupling and to gain some insight in possible consequences of this coupling. The experimental partial molar enthalpy and entropy of water can be reproduced, at least in fairly dilute solutions, if a zone with increased structuring of the water is assumed to exist around the PEO chain. The phase separation that takes place at high temperatures is traced back to the increase in total extension of the zones of enhanced water structure that occurs when the water content is increased. The chain-length dependence of the location of the solubility gap is mainly determined by the combinatorial entropy of the chains. The water solubility of PEO, which is unique in this respect among the polyethers, can be explained in terms of a good strutural fit between the water and the polymer.