From
http://www.fitfortravel.scot.nhs.uk/General/water_purification.html:

 >Iodination is a very effective and convenient method for water
 >purification.  Iodine destroys bacteria, viruses and cysts, and its
 action >is dependent on its concentration, the water temperature and
 duration of >contact.  Thus, a concentration of 8 mgs per litre at 20
 degrees >centigrade, will destroy all pathogens if left for 10 minutes.
 Lower >concentrations and lower water temperatures require a longer
 duration of >action.

and from http://www.high-altitude-medicine.com/water.html:

 >final drinking concentrations calculated at 8 mg iodine/liter

 >Addition of a small amount of vitamin C (50 mg) to your water after the
 >contact time with the iodine will render the water nearly flavorless!

          Eight mg of iodine is 31.5 micromoles, whereas 50 mg of ascorbic
acid is 284 micromoles.  It requires at least two moles of ascorbic acid
per mole of iodine to neutralize it, but even so 50 mg is way more than
enough.  Probably any reasonable small amount is fine.  Iodine has very
low solubility in water.  An easy way to dose your drinking water is to
carry a one-ounce Nalgene bottle with iodine crystals and water in it.
Use half an ounce of the saturated iodine water per liter of untreated
water under normal conditions - more if the water is really nasty or the
temperature is low.  Wait 30 minutes and then your water is safe to use.
If you refill the iodine bottle with water every time you use it, it's
always ready to go.  It does take a while for the water in the little
bottle to resaturate though, so you can't fill too many canteens in a row.
 This is best for a personal system, rather than for a whole group.  A
much larger iodine stock solution bottle would be needed for purifying
5-gallon jugs, for example, so bulk might become a problem for large
volumes.  One can also use tincture of iodine, but I do not know the dose,
and there is more in that than just iodine and water.  There are
commercial products that contain iodine crystals sequestered such that
they can't be poured out with the saturated solution, but it's not hard to
keep from pouring out the crystals when you decant the saturated solution
Since iodine is pretty dense, the crystals tends to stay at the bottom of
the little bottle.  I've been using this system for at least twenty years
all over the US and Mexico and I've never gotten sick from bad water, as
far as I know.
(From Mark Minton, Cavers Digest 5790. June 6 2003)