An Air Transat Boeing 737-700, registration C-GYQV performing flight TS-760 from Montreal,QC (Canada) to San Salvador (El Salvador) with 137 people on board, was enroute at FL340 about 150nm southeast of Toronto,ON (Canada) when the crew received indications of fluctuating cabin pressure, no master caution was generated however. The crew worked the checklists for failure of automatic cabin pressure control, however, the cabin pressure became uncontrollable even in manual control. The crew worked the checklist emergency descent and initiated a descent to 10,000 feet turning to return to Montreal initially, but then requesting to divert to Toronto, where the aircraft landed safely about 80 minutes after leaving FL340. The Canadian TSB reported maintenance discovered the outflow valve was contaminated with ice due to a potable water line fitting that had burst in the vicinity of the valve. The ice was removed and the area dried, the water line was repaired and the cabin pressure system tested.