Solving of several global and regional problems requires adequate data about lake water quality parameters like the amount and type of phytoplankton dominating in the lakes, the amount of dissolved and coloured dissolved organic matter and/or concentration of suspended sediment. Remote sensing is the only practical way to study many lakes provided it can produce sufficiently accurate estimates of the water characteristics. We studied optically very variable lakes in order to test both physics based methods and conventional band-ratio type algorithms in retrieval of water parameters. The modelled spectral library used in the physics based approach provided very good results for chlorophyll-a retrieval. The number of different concentrations of CDOM and suspended matter used in the simulations was too low to provide good estimates of these parameters. Extending the spectral library is currently in progress. Band-ratio type algorithms worked well in chlorophyll-a and CDOM retrieval. None of the algorithms tested for total suspended matter, organic suspended matter and inorganic suspended matter retrieval performed well enough and there is need in further testing.