With water level do you mean ground water level or water above ground level e.g. flood?
I drafted a design for a water level indicator a while back, but never got around to actually build it. The plan was to use a low pressure sensor (say 0-1 psi full scale) and mount the sensor to one end of a pipe (plastic tube). The other end of the pipe is open and goes into the tank. When water level rises, the air column trapped inside the pipe will get compressed and so pressure will increase. The pressure (relative to open air) will be proportional to water level.
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