Minister of State at the Department of the Environment Paudie Coffey said he was aware that Hilary Quinlan, who resigned yesterday as a director of Irish Water, was a member of the semi-State board when he hired him as a personal driver.

Mr Quinlan stepped down from his position with Irish Water, which came with an annual fee of €15,000, after The Irish Times reported he was also working for Mr Coffey, a Minister in the department which oversees the utility company.

Speaking last night, Mr Coffey said Mr Quinlan had made the right decision “because it removes any doubt or any confusion or any potential conflict of interest”. He said he was aware of his position on the Irish Water board, but didn’t “understand there was any conflict of interest”.

The Minister acknowledged that the “optics” of the situation could look wrong but he said “the perception is wrong”.

An Irish Water spokeswoman confirmed Mr Quinlan’s resignation from the board, as did Taoiseach Enda Kenny in the Dáil, following calls for him to step down from both Government and Opposition deputies.

However, Mr Coffey said Mr Quinlan will continue to work as one of his personal drivers. Ministers are entitled to civilian drivers, who work on a week on, week off basis and get paid €665 per week.

Mr Quinlan's appointment to the Irish Water board was approved by then ministers Phil Hogan and Pat Rabbitte in November 2013. He was a councillor of 30 years standing in Waterford until he lost his seat in the local elections earlier this year. This entitled him to a gratuity payment of €57,757.

Mr Coffey said he had known Mr Quinlan for many years, adding: “I appointed him when he was unemployed, at the end of August. He was appointed as a civilian driver . . . and he is remaining on as a civilian driver.

“I do welcome the fact that he is resigning from the Irish Water board here today because I think it removes any doubt or any confusion of any potential conflict of interest. Hilary Quinlan is a good man, and I’d certainly hate to see his name or anyone else’s name being dragged through the dirt in the wrong.”

The Waterford TD said he wasn’t responsible for appointing Mr Quinlan to the board of Irish Water. Mr Quinlan was given the position, Mr Coffey said, because he “is a former president of the association of city and county councils”.