The Government has outlined the free water allowance that households will receive and set out how Irish Water will be funded.
There will be a free allowance of 30,000 litres per household.
An additional allowance will be made to cover normal water consumption of children under 18, which the Government says will effectively mean water charges will not apply to children.
Charges will be capped for people with certain medical conditions and there will be €100 allowance for carers, pensioners and people with disabilities.
There will be no standing charge, but the Commission for Energy Regulation may decide to impose one for holiday homes.
The Government said funding for Irish Water should allow for an average water charges bill of €240 a year and that tariff will remain fixed until the end of 2016.
Water pressure will be reduced if people do not pay their bills.
Irish Water will be directed to take account of the quality of services provided to customers, including circumstances where services are reduced or restricted, for example due to boil water notices.
Minister for the Environment Phil Hogan said households not metered by the time charges come in would primarily be charged on the basis of the number of residents.
Earlier, Minister for Public Expenditure and Reform Brendan Howlin said the Government had constructed water charges in a fair way for families.
Speaking on his way into the Cabinet meeting at Government Buildings, he said: "We promised in the Programme for Government that there would be a generous allowance of free water to every household - particularly focused on children - and we have been working to achieve that and we have done that.
"We felt that having a standing charge, regardless of the amount of water you used, would be at variance with that policy, so we're glad that we've made that progress."
Minister Howlin also said paying for utilities such as water was one of a number of difficult steps on the road to recovery.
Tánaiste Eamon Gilmore said he expected that Irish Water would introduce a set of measures to encourage water conservation.
He said there is currently a loss of water of about 40% from the system and that the structure of the charging regime would incentivise conservation.
Speaking during Leaders' Questions today, Sinn Féin leader Gerry Adams said the parties supporting water charges, Fine Gael, Labour and Fianna Fáil, must take full responsibility for this extra burden on struggling households.
Taoiseach Enda Kenny said that he did not accept Mr Adams's charge and reiterated that Sinn Féin supports water charges in Northern Ireland.
Mr Kenny said that "down here" Mr Adams seemed to believe that you should pay for nothing, contribute nothing and get all these resources for free.
Minister Hogan said this evening that the amount that people pay for water will depend on the amount of water they use.
He told RTÉ's Six One News that Irish Water will have to raise a substantial amount of money in order to improve the current water network.
The minister said that a single person uses 78,000 litres a year and the Government will allow 30,000 litres free.
He said that if households engage in the water conservation programme, which is due to be announced, they will save more money.
The Dáil discussed a Fianna Fáil Private Members' motion on the issue tonight.
The motion is calling on Fine Gael and Labour to end the secrecy over water charges and come clean with households about how much they will be forced to pay.
It calls for clarification on how the one million unmetered households will be charged and a commitment to providing rebates to households with poor water quality.
It also calls for concessions for people with special needs, large families and households that are in serious financial difficulty.
Fianna Fáil's Dara Calleary said despite the "big drama" today, there are still questions to be answered.