He spent the next two seasons learning from former Manchester United, Aston Villa and Coventry City goalkeeper Les Sealey and sitting in the pecking order behind Craig Forrest, Bernard Lama and Shaka Hislop. With first team opportunities limited, Bywater joined Wycombe Wanderers on loan in September 1999, making two appearances, and then went to Hull City on loan in November 1999, making four appearances. A broken leg for Shaka Hislop meant a debut for Bywater at the age of 19 against Bradford City in February 2000, in a game that saw Bradford score four times but which West Ham eventually won 5-4. Bywater also appeared in the final three games of the 1999-00 season, against Arsenal, Sunderland and Leeds United and made a single appearance in the following season against Bradford in February 2001.
Wolves signed Bywater on loan in July 2001 to ease a goalkeeping crisis but he returned to West Ham the following month having not made an appearance for Wolves other than on the bench in the opening game of the season against Portsmouth. His chances to move up the pecking order were limited with the club signing David James in July 2001 and the retention of Shaka Hislop as James was injured on international duty in August 2001, and he did not make a single appearance for West Ham in the 2001/02 season nor in the 2002/03 season. He joined Cardiff City on a one-month loan at the end of March 2003 but made no appearance there.
Eventually, after the club was relegated in 2002-03 and David James moved to Manchester City in January 2004, Bywater became a regular starter in the first-team, making 23 appearances as West Ham reached the First Division play-off final, where they were beaten 1-0 by Crystal Palace. He signed a three-year contract extension in June 2004, saying "I am very pleased to have signed on for another three years at West Ham. We were very unlucky last year and I am sure that we will start next season with a squad capable of challenging for promotion again. The club have invested a lot in my career and the manager showed great faith in me last season. I am determined to repay everyone at the club by helping the team back into the Premiership."
He soon had to share the role of the club's primary keeper with Jimmy Walker who was brought in from Walsall in June 2004 to provide competition for Bywater. Bywater made 39 league and cup appearances in the 2004-05 season for West Ham as the club were promoted to the Premiership, and appeared in the play-off final at the Millennium Stadium in May 2005, coming on as a late substitute for the injured Jimmy Walker in the 1-0 victory over Preston North End.
The signing of Roy Carroll in June 2005 and the re-signing of Shaka Hislop on a one-year contract in July 2005 once again limited Bywater's first-team opportunities and he joined Coventry City in August 2005, on loan until the end of the year, where he made 14 appearances. An injury to Carroll however led to Bywater being recalled from Coventry in October 2005. He made a single appearance for West Ham in the remainder of the 2005/06 season, against West Bromwich Albion in November 2005.
Bywater joined Derby County in August 2006 on an initial emergency loan deal for two weeks and signed a permanent three-year deal two weeks later for a fee of £225,000. He wears the number 43 shirt at Derby as a tribute to his mentor and former goalkeeping coach Les Sealey, who died at the age of 43 in 2001, saying, "Les looked after me most of the time. He took me to training every day, coached me and advised me on life. I know he is watching over me and that he wants me to do well, so that was for him." Bywater made 43 league and cup appearances in the 2006/07 season as Derby reached the Championship play-off final, where they beat West Bromwich Albion 1-0 to secure a place in the Premier League.
In June 2007, Bywater reiterated his desire to play for England and his hopes to be noticed in the 2007-08 season, saying "I grew up with a few of the lads like Paul Robinson, Rob Green and Chris Kirkland and they are good but I don't think they are anything special. I do believe if I play well and have a good season, I will be up there in contention. I am confident but not cocky." After a first half of the season that saw Derby County rooted to the foot of the Premier League, Bywater joined Ipswich Town on loan in January 2008 for the rest of the season. Jim Magilton, manager of Ipswich Town, described him as, "...a young, ambitious keeper who knows what is needed to win promotion from this division." He made his debut for Ipswich Town against Sheffield Wednesday in February 2008 and made 17 appearances in the remainder of the 2007–08 season as Ipswich finished below the play-off places.