Irish Water is to be separated from Ervia and established as a single national utility to operate the State's water services.
The proposals, which were presented to Cabinet by Minister for Housing Eoghan Murphy last Thursday for approval, will come into effect by 2023, The Irish Times has learned.
It is understood the plans, approved by Cabinet, will allow for Irish Water to become solely responsible for the production, distribution and monitoring of drinking water and for the provision of public waste-water services.
Currently the utility has service level agreements (SLAs) with local authorities to operate such services on its behalf, but under these new proposals such arrangements would be brought to an end by 2021.
The decision follows weeks of water shortages across the country, and comes as restrictions on water pressure begin to take effect across the greater Dublin area on Monday
The ending of the agreements with city and county councils is likely to result in job losses at local authority level, but the precise details or the scale of such are not yet known.
Government figures said Irish Water was always a standalone entity within the Ervia group. However, given the abolishing of domestic water charges and planned new oversight measures of Irish Water by the Comptroller and Auditor General, it “is time to separate it out of Ervia entirely”.
Ending the SLAs early will help “deliver savings for taxpayers”, a senior source said.
Irish Water has estimated it could result in savings of €70 million per year.
The board of the utility and Ervia are to be formally notified of the changes this week, it is understood.
The decision follows weeks of water shortages across the country, and comes as restrictions on water pressure begin to take effect across the greater Dublin area on Monday.
Meanwhile, Mr Murphy has confirmed he has received advice from the Attorney General Séamus Woulfe on potential wording for a referendum on enshrining public ownership of water services in the Constitution.
In a letter to the Oireachtas Committee on Housing, the Minister said he could not accept the initial wording proposed by Independents4Change TD Joan Collins as it may have unintended consequences for group and private water services.
However, in his correspondence, Mr Murphy added: “My intended outcome is to be in a position to bring a recommendation to Government on a wording capable of being prepared as an amendment to the Bill. My aim is to have clarity on the intended approach when the Dáil resumes after its summer recess in September.”
Last October, Taoiseach Leo Varadkar ruled out a referendum on ownership of the public water system. However, the Government's Water Services Policy, published this year, contradicted that position.