Aims: Spectrally resolved circumstellar H2O(1_10 - 1_01) lines have been obtained towards three M-type AGB stars using the Odin satellite. This provides additional strong constrains on the properties of circumstellar H2O and the circumstellar envelope. Methods: ISO and Odin satellite H2O line data are used as constraints for radiative transfer models. Special consideration is taken to the spectrally resolved Odin line profiles, and the effect of excitation to the first excited vibrational states of the stretching modes (nu1=1 and nu3=1) on the derived abundances is estimated. A non-local, radiative transfer code based on the ALI formalism is used. Results: The H2O abundance estimates are in agreement with previous estimates. The inclusion of the Odin data sets stronger constraints on the size of the H2O envelope. The H2O(1_10 - 1_01) line profiles require a significant reduction in expansion velocity compared to the terminal gas expansion velocity determined in models of CO radio line emission, indicating that the H2O emission lines probe a region where the wind is still being accelerated. Including the nu3=1 state significantly lowers the estimated abundances for the low-mass-loss-rate objects. This shows the importance of detailed modelling, in particular the details of the infrared spectrum in the range 3 to 6 micron, to estimate accurate circumstellar H2O abundances. Conclusions: Spectrally resolved circumstellar H2O emission lines are important probes of the physics and chemistry in the inner regions of circumstellar envelopes around asymptotic giant branch stars. Predictions for H2O emission lines in the spectral range of the upcoming Herschel/HIFI mission indicate that these observations will be very important in this context.