From Wikipedia (http://en.wikipedia.org/wiki/Holy_water)
Roman Catholic Holy Water
Holy Water is water that has been blessed and set apart for baptism. It is also used as a sacramental. Holy water is kept in the font, the church furnishing used for baptisms, which is typically located at either the entrance to the church (or sometimes in a separate room or building called a baptistery); its location at the entrance serves as a reminder of the centrality of baptism as the primary rite of initiation into the Christian faith. Smaller vessels, called stoups, are usually placed at the entrances of the church. As a reminder of baptism, Catholics dip their fingers in the holy water and make the sign of the cross when entering the church. The liturgy may begin on Sundays with the Rite of Blessing and Sprinkling Holy Water, in which holy water is sprinkled upon the congregation; this is called aspersion, from the Latin, to sprinkle. This ceremony dates back to the ninth century. An aspergill or aspergillum is a brush or branch used to sprinkle the water. An aspersorium is the vessel which holds the holy water and into which the aspergillum is dipped. Salt may be added to the water "where it is customary."
For more on sacramentals, see the Catechism of the Catholic Church, ss. 1667, 1668
Rituals and uses of holy water
The rite of blessing takes place during the Easter Vigil in preparation for baptism. Holy water can also be blessed on any day as part of the baptismal rite; the same prayer of blessing is used.
RITE OF BLESSING
Father, you give us grace through sacramental signs, which tell us of the wonders of your unseen power.
In baptism we use your gift of water, which you have made a rich symbol of the grace you give us in this sacrament.
At the very dawn of creation your Spirit breathed on the waters, making them the wellspring of all holiness.
The waters of the great flood you made a sign of the waters of baptism, that make an end of sin and a new beginning of goodness.
Through the waters of the Red Sea you led Israel out of slavery, to be an image of God's holy people, set free from sin by baptism.
In the waters of the Jordan your Son was baptized by John and anointed with the Spirit.
Your Son willed that water and blood should flow from his side as he hung upon the cross.
After his resurrection he told his disciples: "Go out and teach all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit."
Father, look now with love upon your Church, and unseal for her the fountain of baptism.
By the power of the Spirit give to the water of th is font the grace of your Son.
You created man in your own likeness: cleanse him from sin in a new birth of innocence by water and the Spirit.
We ask you, Father, with your Son to send the Holy Spirit upon the waters of this font.
May all who are buried with Christ in the death of baptism rise also with him to newness of life. We ask this through Christ our Lord. Amen.
Once blessed, more ordinary water can be added to the supply of holy water, and the entire quantity of water remains blessed provided that the amount added is less than the amount of water that was there.
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