Households are to pay 40 euro a year - to cover the cost of installing and maintaining water meters.
The fee will be paid on an annual basis - and does not include usage charges.
The National Pension Reserve Fund is to provide a 450 million euro loan for the water metering programme - which will have to be paid back by the taxpayer over 20 years.
That means an annual levy for households of 40 euro - in addition to the charge for the water itself - similar to the standing charges people pay on their ESB or Bord Gais bills.
A new utility company - called Irish Water - will be set up on a transitional basis - and the charge to come into effect by 2014.
The Environment Minister Phil Hogan will bring the proposals to Cabinet this morning - and the process of installing the meters in over a million homes will begin this year.