Opposition politicians have criticised the Government amid conflicting reports that the €100 Water Conservation Grant may be made conditional on payment of the charge.
Sinn Féin's Dessie Ellis said Irish Water has been "one fiasco after another".
He said his party's position is that Irish Water should be abolished, and the Government should take the message of all of the water protests on board.
Fianna Fáil has also criticised the Government's policy on the grant, which it says has descended into "farce".
Environment spokesperson Barry Cowen said reports that the Government was considering changing the terms of the grant were just more of the ongoing mess surrounding Irish Water.
"It's not funny, it's that serious," he said.
Mr Cowen said it was time for real, alternative policies in relation to Irish Water.
This evening the Green Party leader Eamon Ryan said the water conservation grant is not a grant, but an accounting trick that was designed to get the Government through European rules that failed.
He told RTÉ's Drivetime that there should be a conservation grant for saving water, supporting rain-harnessing devices and better regulations.
Mr Ryan said there is a case for Government to charge for waste, but the current Irish Water model needs to be scrapped.
Meanwhile, Socialist party TD Paul Murphy said the Government is in absolute disarray on the issue of water charges and there were mixed messages coming from Fine Gael and Labour.
"It's clear that they're reeling from the shock of 57% non-payment, of failing the Eurostat test as a result, and they're looking for some small measure to in some way improve the image of Irish Water or convince people to pay the water charges and they're not going to find it."
He said the conservation grant was a joke from the start and amounted to bribing people with their own money and "money stolen from lone parents".
Mr Murphy said Eurostat had not been fooled by the attempt to disconnect the payment of the grant from payment of water charges.
A department spokesman has said Minister for the Environment Alan Kelly is not considering any plans or proposal to change the terms of the water conservation grant.
At present, people are eligible for the grant once they register with Irish Water, even if they do not pay their bill.
Separately, a spokesman for Tánaiste Joan Burton said the Department of Social Protection is not aware of any proposals to change the terms of the grant, which is administered by that Department.
Government sources say no proposals have been tabled or circulated on any possible changes.
The issue, however, is likely to be discussed by Cabinet in the coming months in light of the Eurostat ruling that Irish Water is not an independent, commercial entity.
It has been widely reported that the Government is expected to consider proposals to change how the grant is paid.
This aspect has angered many Government backbench TDs, and some want the €100 grant linked to bill payment.
The payment of the grant is fixed for 2015 and cannot be changed.
The Department of Finance had ruled out linking the grant to payment of bills when submitting the initial plan to Eurostat.
However, there is pressure among Government backbenchers who feel the current system is unfair to those who pay the bills.
Several Government sources say proposals on a range of issues around Irish Water could emerge during those discussions, including the water conservation grant, but as of now no proposals for changes are being considered.
Any proposal to change the existing system would require approval from the Department of Finance and if changes are made they would not be possible until 2016 or beyond given the logistics of changing the existing system.
Former Minister for State at the Department of Environment Fergus O' Dowd has said the failure of the Eurostat test has given the Government the opportunity to introduce a more efficent, scaled-down Irish Water utility.
Speaking on RTÉ's News at one, Mr O'Dowd said the Government now had increased flexiblity and should consider giving a subsidy to Irish Water, instead of using the mechanism of the €100 water conservation grant.
He said he believed there needed to be changes at the top of Irish Water and a new dynamic needed to be introduced into the argument.
Mr O'Dowd said people were prepared to pay if costs were reduced and if the issue of privatisation was addressed categorically by way of referendum.
He said Irish Water needed to put a voluntary redundancy scheme in place nationally to address over-staffing, predicting that between 1,500 and 2,000 workers might be attracted by such a package.
