For an accurate estimation of body fat the Bod Pod, as Denisecaton indicated, is an alternative to hydrostatic weighing and produces similar results, but skinfolds done accurately are just as good assuming you use a valid equation.
If you want an accurate estimation of body fat, the best thing to do is call your local University and contact their Exercise Physiology Department and they can test you.
Anon26390, there are several ways to fool a hydrostatic weighing test, but not if done correctly. If you want to show a higher body fat simply blow out less air when under water.
It is all about density, how much space you take up versus how much you weigh. The more you weigh and the less space (volume) you take up the more dense you are and the more muscle you have. Obviously, the more dense you are the less likely you are to float, if you are mostly fat then it is easy to float.