Water School
Where the fire school can be considered the Yang path, the water school is the Yin path. The underlying premise here is somewhat different to the fire school. Here we have nothing to 
create, nothing to add, instead we begin taking away and letting go. What we are looking for is already there, it's only hidden away due to the accumulation of stress and our own identity. The mediative process works by letting these things go so in a way we are unravelling ourselves and being receptive to what we find.
Generally once the mind is relatively focused and relaxed we begin dissolving the body. Any tension in the body is consciously melted away, this may sound simple but I assure you it's not. We all carry far more tension than we realise, this meditation will highlight that fact but also provide the tools to release it.
Over time the whole body is dissolved allowing you to experience a deep relaxation, not only of body but also of mind. Eventually we say the physical body is dissolved into the Qi body, at this point we then begin the process of dissolving the Qi body. Within this school a human being has eight bodies, each one in turn is be dissolved, ultimately the last body is dissolved into the Tao. Although the mediation has the aim of enlightenment most people practice this style for the deep health benefits. Not only will this meditation create a deep sense of peace it will also open all the channels and ensure the Qi is flowing smoothly.
Over the years I have practised both the Fire and Water method, both are wonderful techniques for creating and maintaining a healthy, relaxed body and mind. They offer a different approach but lead to the same destination.
Below is a talk by Bruce Frantzis, one of the leading authorities on Taoism in the West. Bruce Frantzis is a linage holder in the Water Method and here talks about the 5 stages of meditation.