An unpublished ESRI report has suggested that the inclusion of a "free" water allowance could ultimately result in higher costs for householders.

One of the report's authors, Dr Edgar Morgenroth, said if Irish Water was to be a self-financing utility, then the allowance would just mean a higher per unit charge for the rest of the water a household consumes.

He said it could also have an additional effect in that homes which are not occupied all the time, such as holiday homes, might never use up their entire allowance.

This could then result in such households being entirely exempt from having to pay for water.

While no final decision has yet been made on the issue of a free allowance, Dr Morgenroth suggested that the best way to deal with households which have affordability issues was to target and identify them properly, and not to introduce a blanket allowance for everyone.

Speaking on RTÉ's News at One, he said: "Giving a cover-all measure that applies to every one of the customers of Irish Water isn't going to do that."

The report says that the Department of Social Protection should administer any allowance scheme.

"Ultimately one needs to find some way to identify those households.

"We already do know through both the social welfare system and through the tax system which households are poor, and which may well be in need of some help in this that seems to be an obvious way to do it."

The Department of the Environment said that the Commission for Energy Regulation is to hold a public consultation on the issue and the Government will make a decision on any free allowance following that.