Hello Helen,
I'm not quite sure how the water trick is supposed to work, however, there are bottle indicators that you stick to the out side of the bottle. They have a strip of temperature sensitive paint of liquid Crystal that changes colour with temperature.
When a bottle of LPG is providing gas, the liquid at the bottom of the bottle has to use some latent heat to vapourise more of the liquid. This cools the liquid more than the vapour above it and it is this change of temperature that will be displayed by the gauge. You can see the same effect when roofers use the large propane bottles to melt the tar, you will often see frost on the bottom of the gas tanks.
There are problem with this system, if only a little gas (i.e. a fridge) or no gas is being used the temperature difference disappears so the indicator does not work with bottles that have been standing unused.