Taoiseach Enda Kenny has said that without water charges the top rate of income tax would have to be increased by 4%.
Speaking in Dublin at the Fine Gael Presidential Dinner, he said that without water charges the tax cuts in the Budget would be wiped out.
Responding to calls for the charges to be dropped, Mr Kenny said he was not prepared to do this and the Government would ensure the country's water supply system was improved.
In the wake of today's protests around the country, he said the Government was listening to the public's legitimate concerns and it would bring clarity to the charges soon.
In the next number of weeks there will be clarity on what people will have to pay and what they are going to get in return for that, he said.
Irish Water is needed so money can be borrowed to fix the leaks and invest in the infrastructure, Mr Kenny said.
Earlier, Fianna Fáil called for the suspension of all charges pending a review of Irish Water.
The seven members of the Reform Alliance called for the suspension of all Dáil business next Tuesday and Wednesday in order to discuss Irish Water.
Fianna Fáil spokesperson on the environment Barry Cowen, who attended the protest in Tullamore, Co Offaly, said that unless the Government took people's anger seriously, the Irish Water problems would escalate into an even costlier mess.
Reform Alliance members have written to Government Chief Whip Paul Kehoe to request that TDs from all sides of the Dáil should be given a chance to propose a solution to what is fast approaching a national emergency.
Sinn Féin leader Gerry Adams said after taking part in the Dundalk protest that the Government must listen to the people and end its imposition of water charges.
Meanwhile, MEP Luke 'Ming' Flanagan addressed the crowd in Roscommon, saying that it was a victory for the people who had "stood tall" against austerity and that the Government would hate the large number of people who had turned out at the protest in the town.
"If no one had turned up today, we were beaten so I'm delighted at that so many came out today," he said.
The nationwide rallies come ahead of a Government decision outlining how the charges will be implemented, which is expected in the coming weeks.
Earlier, Minister of State at the Department of Jobs Enterprise and Innovation Ged Nash said serious mistakes were made in the establishment of Irish Water.
Mr Nash told RTÉ News the Government is working on a payment system that is fairer and more affordable.
He said: "We have a very open mind on this and we will respond to the concerns that people have.
"I think some serious mistakes have been made. The timeframe for the establishment of Irish Water was very ambitious and very exacting.
"I think if we were starting again we would have a much longer timeframe to establish what is a very important public utility."
She said: "If the demonstrations don't convince them to ditch it, a mass boycott of the bills is inevitable in January."
Irish Water is due to issue its first bills at the end of January following a decision by the Commission for Energy Regulation to extend the validation campaign until the end of this month.
Anti-Austerity Alliance TD Paul Murphy said following today's protests that the We Won’t Pay campaign "will now go and begin to build in communities a militant and organised campaign of boycott of this charge".
"The Government have backed themselves into a corner, the carrot which they offered through the concessions have been decisively rejected and they do not have a stick big enough to beat back this movement", he said.