Uncertainty of whether water charges will continue is to lead to massive reduction in households paying bills

Families who have paid their water bills will get no refund, even if the charges are abolished as part of a deal to keep Fine Gael in power.

Fianna Fáil has indicated the scrapping of water charges will be a red-line issue if it is to support a minority government headed by Enda Kenny.

But it could be months before any such deal is agreed, and the uncertainty is now expected to result in a massive drop-off in the number of households paying their bills.

However, an EU report warns that if charges are abolished, Irish Water will not come off the State's balance sheet - and this will therefore reduce the money available for spending increases and tax cuts in future Budgets.