In 1866 an aquatic phasmid was reported by Andrew Murray in the Annals and Magazine of Natural History. Murray was reporting it on behalf of Alexander Fry who in turn had been told about it by "someone" in whom Murray assumed Fry had "the fullest confidence". The species concerned was Prisopus flabelliformis from Brazil. The observer said "... its habits were to spend the whole of the day under water, in a stream or rivulet, fixed firmly to a stone....but on the approach of dusk to leave the water and to sally forth into the night air..."
In 1878 James Wood-Mason described a new species, Cotylosoma dipneusticum, from Borneo, and described what he believed were the gills on the insect. A few years later, in 1895, Charles Waterhouse illustrated the specimen and corrected the locality: it was from Taviuni in the Fiji Islands, not from Borneo. Waterhouse cast some doubt on the aquatic nature of this phasmid.
In 1912 Gahan described a new species, Prisopus fisheri, which was found on a tree, and referred back to Murray's and Wood-Mason's supposed aquatic species. Gahan clearly believed they were both mistaken about the aquatic nature of their species. The myth of aquatic phasmids should have been laid to rest by Uvarov in 1935 who looked into the matter in some detail. However, there is the problem of the Water Stick Insect, a well documented, fully aquatic stick insect. The only thing is, although it is a stick-shaped insect, it is not a phasmid: it is a true bug (Order Hemiptera) in the family Nepidae. The family is mainly tropical, but there is one British Water Stick Insect, Ranatra linearis, although, as mentioned, this is not a phasmid. The British Water Scorpion belongs in the same family.
It is well worth reading the five references given above. The relevant parts are quite short and easy to read; together they give an interesting insight into how mistakes are made and into how scientific knowledge develops.