The Government can exempt schools from having to pay water charges, which are costing some of them up to €10,000 annually, the European Commission indicated last night.
A succession of Ministers led by Taoiseach Bertie Ahern and Minister for Education and Science Mary Hanafin have said EU rules prevent exemption.
However, one section of the EU legislation, which is ironically known by Brussels officials as "the Irish clause", specifically allows member states to make exceptions in certain cases.
Last night, a senior commission environment directorate general official, Jorge Rodríguez Romero, said he could "see no reason" why schools could not be exempted from paying the annual charges.
"I do not really see schools having a serious impact on the purposes of the directive.
"I don't see, really, that this is so much of an issue," he told The Irish Times in response to questions.
The Government, he said, was entitled to make exceptions to the directive, which in any event did not come into effect until September 2010, by itself and without the prior approval of the commission.
The derogation clause has been consistently interpreted by the Government during the current controversy as covering homes only, and it has insisted that it did not have freedom to include schools.
Article 9 (4) of the EU's water framework directive gives freedom to member states to make exceptions, "where this does not compromise the purposes and the achievement of the purposes of the legislation".
Though prior approval is not necessary, the commission could later challenge exemptions if it believed later that the ambitions of the legislation - designed to improve and sustain water quality and supplies, were being ignored.
The remarks by Mr Rodríguez Romero, who is acknowledged to be the commission's leading expert on the water directive, will put new strains on the Government to intervene in the controversy.
In the Dáil yesterday, the Taoiseach insisted that the Government had achieved a derogation for homeowners from having to pay water rates only "after a significant debate" in the difficult 1999 talks.
"We did not achieve derogation in other areas, schools being one of those areas, and therefore the EU water framework directive 1999 is being implemented," Mr Ahern told Fine Gael leader Enda Kenny.
Four-thousand meters are currently being installed in schools throughout the State, though, the Taoiseach said, local authorities should charge similar fees to schools for supplies, which is not happening.
Earlier, Mr Kenny had told the Dáil that one school in Co Sligo was facing a €7,000 bill, while one in Co Galway must find €8,000 and another in Co Louth would have to pay €2,500 this year and €8,000 next year.