Water molecules are polar molecules with large value of relative permittivity (78.5).
If the water (H2O) is used as dielectric between the plates of the capacitors, the water molecules due to polar properties will have a large value of conduction at certain voltage. 
This large value of conduction turning the dielectric property of a water molecule into a conductor.
The H+ and OH- ions are moving charges and can easily leak between the plates of a capacitor and cause discharging.
Thus water cannot be used as dielectric between the plates of the capacitors.

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