The Department of Social Protection warned it did not have adequate resources to administer the €100 water conservation grant established by the Coalition.
In correspondence between the secretary general in the department Niamh O'Donoghue and her counterpart in the Department of Public Expenditure and Reform, Robert Watt, Ms O'Donoghue said the charge "cannot be resourced" with her existing staff levels.
A spokesman for the Department of Social Protection said resources are continually assessed and any additional money needed will be provided.
However, Fianna Fáil environment spokesman Barry Cowen, who obtained the letter under Freedom of Information (FOI), said it showed "how little thought or preparation went into this policy from the Government".
In her letter of November 24th, Ms O’Donoghue said: “Resourcing the processing/payment water services grant of water conservation grant applications in 2015 and beyond needs to be addressed and cannot be accommodated from within the existing resource/administration budget allocation.”
She said it is “critical” the project advances quickly so payments of the grant can be made by the autumn.
The grant will be given to everyone who registers with Irish Water and was introduced by the Coalition as part of its u-turn on water charges last year.
Water bills will be capped at €260 for families and €160 for single adult homes, but will be reduced to €160 and €60 when the €100 water grant is included.
Ms O’Donoghue said her department needs the additional money for consultancy, legal and procurement costs; postal charges for covering the cost of writing to all households; the cost of advertisements advising people how to apply for the grant, as well as additional administrative costs.
However, Mr Cowen, an Offaly TD, said: “It is clear that no work was done trying to understand the financial or other resource implications that this entirely new payments system was going to have on the Department it was dumped on.
“We still don’t know how much this is going to cost, but we do know that it will further undermine the net income raised through water charges and it will further undermine the entire rationale for setting up the Irish Water quango.
“The Government has been making up its water strategy as it goes along - we see from this correspondence the impact this is having on the public service charged with trying to keep focussed on a constantly moving target.”