Land and Water Conservation Fund Water Amendments Act of 2021 This bill authorizes the Department of the Interior to provide financial assistance for water quality improvement projects from amounts made available under the Land and Water Conservation Fund. Interior shall only provide such financial assistance to projects that seek to improve water quality by improving, restoring, remediating, or developing natural hydrological systems, such as wetlands and living shorelines. To be eligible for assistance, a state's comprehensive statewide outdoor recreation plan shall identify any body of water within the state for which a water quality control plan has been developed pursuant to the Federal Water Pollution Control Act, and any proposed water quality project to be conducted with respect to such body of water.