Finance Minister Michael Noonan has said that to alleviate the new water charges income tax relief will be available at the standard rate.
He said that this would be in respect of water charges up to a maximum of €500 per household per year.
He said the water charges relief will be worth up to €100 per household per annum when claimed in the following year.
Right2Water described the measures as a panicked response to Saturday's protest against water charges and said it showed that the "water tax cannot be reformed and must be abolished".
The campaign group said that the Government had "introduced a new anomaly to its crumbling water tax edifice" by introducing a tax credit and extending the Household Benefits package, which will leave hundreds of thousands of low earners empty handed.