Water Clarification and Sludge Handling System has the feature that filtrate is to be treated and is injected with a coagulant mixture and saturated with compressed air just before the mixture is fed to the clarifier. The System has the feature that a skimmer skims off the solids and pushes them towards a sludge pump which pumps them to the sludge collection tank. The System ensures that clarified water is pumped to storage for reuse in the de-inking plant with a TSS capture rate of 95% or better and a sludge consistency of up to 12%, the provides efficient performance over competition. The Water Clarification and Sludge Handling System tolerate upstream variations and feed flow fluctuations and achieve significant polymer savings.