The Oireachtas committee is to agree to prosecute householders who waste water and impose sanctions on them.
Legal advice given to the members confirms the 2007 Water Services Act can be amended to ensure compliance with the EU Water Framework Directive.
The latest report of the committee suggests householders who waste water should be prosecuted and have sanctions imposed.
It says excessive usage should be monitored by district metering and satellite imaging should be used to identify individual householders who waste water.
Excessive usage, it says, should be determined by the Commission for Energy Regulation.
It is understood some members are reluctant to introduce a scheme where householders would be taken to court.
However the draft report does suggest this method.
It stresses homeowners who have paid their bills should be refunded but does not outline the method of repayment.
On metering the draft report said the Government should consider how best to incentivise voluntary take up of a free domestic water meter supply.
Bulk metering should be installed for multi-unit developments such as apartment blocks and new builds should have meters installed to all new dwellings.
The committee also recommends that domestic water use is funded through taxation and this must be identifiable in order to comply with the EU water directive.
The European Water Framework Directive insists on a system being in place to allow for the recovery of costs for the provision of water services and breaches of it can result in member states being fined.
Fianna Fáil said it would not support a levy for excessive use but would back provisions under the existing legislation, which would fine those who abuse water. Fine Gael insisted this would not meet European law and requested the independent legal opinion. It appears both parties now agree the 2007 Act can be the basis for a deal.
Fine Gael is requesting the legislation is changed to remove the threat of court action and a reduction in water supply. It is understood Minister for Housing Simon Coveney and Fianna Fáil's Barry Cowen were in contact on the issue over the weekend.
