Small amplitude water waves propagating in a medium with a steady non-uniform current are investigated. The non-uniform current is obtained by up-or downwelling through the horizontal bed. A new locally valid velocity potential correct to the second order is derived describing the combined wave-current motion. From this solution expressions for the local evolution of the wave amplitude and the wave number are extracted. These expressions are compared with the results found using the principle of wave action conservation and the linear dispersion relation, and good agreement is found at small distances compared to the wavelength. Unlike earlier works there is no restriction to deep water. The results valid for deep water are found as a special case of the general solution and agree with the solution found by Longuet-Higgins, M.S. and Stewart, R.W. (1961) The changes in amplitude of short gravity waves on steady non-uniform currents. Journal of Fluid Mechanics, 10(4), 529-549. Furthermore, it is shown that the principle of wave action conservation in fact holds for waves propagating in a medium with a steady non-uniform current maintained by up-/downwelling also on finite depth.