We show how an embedded many-body expansion (EMBE) can be used to calculate accurate emph{ab initio} energies of water clusters and ice structures using wavefunction-based methods. We use the EMBE described recently by Bygrave emph{et al.} (J. Chem. Phys. textbf{137}, 164102 (2012)), in which the terms in the expansion are obtained from calculations on monomers, dimers, etc. acted on by an approximate representation of the embedding field due to all other molecules in the system, this field being a sum of Coulomb and exchange-repulsion fields. Our strategy is to separate the total energy of the system into Hartree-Fock and correlation parts, using the EMBE only for the correlation energy, with the Hartree-Fock energy calculated using standard molecular quantum chemistry for clusters and plane-wave methods for crystals. Our tests on a range of different water clusters up to the 16-mer show that for the second-order Mo{}ller-Plesset (MP2) method the EMBE truncated at 2-body level reproduces to better than 0.1 m$E_{rm h}$/monomer the correlation energy from standard methods. The use of EMBE for computing coupled-cluster energies of clusters is also discussed. For the ice structures Ih, II and VIII, we find that MP2 energies near the complete basis-set limit reproduce very well the experimental values of the absolute and relative binding energies, but that the use of coupled-cluster methods for many-body correlation (non-additive dispersion) is essential for a full description. Possible future applications of the EMBE approach are suggested.