The detection of circumstellar water vapour around the ageing carbon star IRC +10216 challenged the current understanding of chemistry in old stars, because water was predicted to be almost absent in carbon-rich stars. Several explanations for the water were postulated, including the vaporization of icy bodies (comets or dwarf planets) in orbit around the star, grain surface reactions, and photochemistry in the outer circumstellar envelope. With a single water line detected so far from this one carbon-rich evolved star, it is difficult to discriminate between the different mechanisms proposed. Here we report the detection of dozens of water vapour lines in the far-infrared and sub-millimetre spectrum of IRC +10216 using the Herschel satellite. This includes some high-excitation lines with energies corresponding to approximately 1,000 K, which can be explained only if water is present in the warm inner sooty region of the envelope. A plausible explanation for the warm water appears to be the penetration of ultraviolet photons deep into a clumpy circumstellar envelope. This mechanism also triggers the formation of other molecules, such as ammonia, whose observed abundances are much higher than hitherto predicted.