The Oireachtas Water committee has decided to scrap charges, approve refunds and to reject mandatory metering of new builds.

The committee will meet tomorrow to formally approve its draft report, which will then be debated in the Dáil.

In a statement, Fine Gael said the party believes what was voted through the committee this evening "falls well short of our obligations under the Water Framework Directive and puts Ireland on a collision course with the European Commission".

The statement added: "Ultimately, we cannot stand over a politically expedient report that is misleading to the public and ignores the serious consequences for Ireland.

"Fine Gael believes what has been voted on today, if implemented, will leave Irish people open to tens of millions of fines under EU laws and is contrary to the previous advice of the Attorney General to Government in relation to this."

Fine Gael minister Simon Coveney accused Fianna Fáil of undermining an earlier agreement.

Fianna Fáil TD Barry Cowen rejected the housing minister's claim, but added that people did not want an election on the water issue last year and they do not want it now.

Mr Cowen, speaking on behalf of his colleagues on the committee, issued a statement stating that "the behaviour and commentary of Fine Gael representatives on the committee over the course of the last 24 hours has been deeply frustrating and disappointing".

He continued: "I am happy that the Fianna Fáil team has behaved with honour and honesty throughout the process and have stuck to all the agreements we have made.

"It is for others, and in particular the Fine Gael party to explain why it has walked away from a deal it was championing and taking credit for as recently as last Thursday."

Former environment minister Alan Kelly earlier described the water charges issue as a "complete and utter farce", and said there was a predetermined outcome to the talks.

He said the proposals do not meet European Union law and it was guaranteed that the State would eventually have to pay massive fines.

Speaking on RTÉ's Today with Sean O'Rourke, the Labour TD said working people who pay taxes, through income tax, are getting screwed again and will end up paying for everyone else.

In addition, he said, business people and those with septic tanks will pay on the double.

Mr Kelly said from an environmental and investment point of view we "need to wake up to what's coming down the road" and asked where funding for water is going to come from after this year.

He said he believed the majority of people understood the need to pay for water.