I'm currently working on tiling my bathroom but because of water damage the floor has distorted.
The subfloor is chipboard and is crowning up to 7mm.
How do I go about levelling the wooden floor before starting to tile?
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7mm (~0.28 in) is quite a bit of crowning, more than can be absorbed by the thinset bed you'll set your cement board in. You'll need to level the floor before you can continue, which you already know.
Dealing with crowning is tricky because you need to raise the rest of the floor to be level. You can use a self-leveling compound or similar skimcoat to raise the floor but that can be expensive if doing a large area at such a thickness. You can also get 1/4" (6mm) OSB and glue and screw pieces in the low areas, then use the leveler or skim coat to finish the job. That will save some money since OSB is usually much less expensive per square foot than leveling mortar.
You might know this already, but for the sake of others who come here looking for help:
Do not put tile directly on a wooden subfloor
Wood, even subfloor, moves with changes in temperature and humidity. Tile does not. Adhering tile directly to a wooden subfloor will usually result in the tile popping free after a while. To prevent this, we trowel out a bed of thinset, lay cement board (which does not move), and then thinset the tile to the cement board. This decouples the tile from the wooden floor and gives it a stable surface to support it. There are other decoupling systems available, such as Schluter DITRA, but they all have the same purpose.