The seaside town has no treatment plant at the moment and untreated wastewater is currently being discharged into the sea at Bundoran Bay.
The recently published EPA report "Focus on Urban Waste Water Treatment in 2013" highlighted a number of towns and villages across the country where there is inadequate or no wastewater treatment.
Under its Capital Investment Programme, Irish Water is prioritising projects to address these deficits, including a new treatment plant for Bundoran.
Irish Water says it now plans to secure the land rights necessary to complete the work by Compulsory Purchase Order, before the contract can be awarded.
The land areas subject to the CPO, on which there are no properties, are in Magheracar and Drumacrin, Bundoran and affected land owners have been advised and can lodge objections with An Bord Pleanala on or before 2nd July next.
Approximately, €9M will be spent on the Wastewater Treatment Plant and associated pumping stations, sewers, outfalls and the access road in Bundoran.