You should use sterile water or as otherwise directed by your physician. Most physicians recommend use of tap water with the LoFric® catheter. Small amounts of bacteria in water are generally not going to increase your chance of getting a UTI, since on a normal catheterization regimen, urine is not in the bladder long enough to allow bacteria to colonize.
If you doubt the quality of the tap water, for example in a foreign country, you may use bottled water, sterile water or saline solution.