Minister of State Fergus O'Dowd has told the Joint Committee on Environment, Transport, Culture and the Gaeltacht that nobody will be charged for water until the beginning of 2014.
He said there will be a free allowance of water for householders, and after that householders will be charged.
The amount of the free allowance has not been determined yet.
He also said the Government is to establish a regulator for the water sector, and that the regulator will have discussions with the Department of Social Protection about affordability issues.
It also emerged that a semi-State body responsible for supplying drinking water and providing waste water services will be established by mid-2013 and will be called Irish Water.
Mr O'Dowd said Ireland is the only country in the OECD where households do not pay for the water they use.
He said metering is the only fair way to measure the consumption of water and metering water would achieve a reduction of 10% and thereby reduce the cost of water services.
He said the installation of meters will commence in 2012 and 2,000 jobs will be created through the metering programme.
Sinn Féin's Brian Stanley has expressed his concern at the establishment of another semi-State body.
He said the loss of local accountability and responsibility is going down a "dangerous road", and that the Minister is looking at endangering the reason for local authorities.
Mr O'Dowd assured the committee that there is no legislation in place for this authority just yet.
He said it will be a public utility and not a private utility.
The Government is considering using existing State agencies who are interested in becoming Irish Water.
It is expected to take five or six years before all water services come under the remit of Irish Water.