The Commission for Energy Regulation has approved a 25 per cent increase in the price An Bord Gáis can charge residential and small business customers.
The Commission blamed the rise on the higher cost of procuring gas from international markets which it said Bord Gáis had no control over.
Bord Gáis had originally applied to the energy regulator for a price increase of 34 per cent.
The average domestic heating bill is approximately €756 a year, according to Bord Gáis. A 25 per cent hike in prices will bring this up to €946 - an increase of €190 on the average annual bill.
The increase in prices will take effect in three weeks time on October 1st. The energy regulator today also sanctioned a 3.1 per cent rise in electricity prices for households to come into effect on January 1st next.
Electricity prices will rise by 5.2 per cent for small and medium sized businesses and by 8 per cent for large businesses.
The hike in electricity and gas prices come in the wake of soaring petrol prices and threaten the economy's low inflation rate.
ISME, the Independent Business Organisation, called today's decision "a disgrace and another nail in the coffin for many businesses."
The group's chief executive Mark Fielding said: "With business input costs soaring through the roof these increases are the last thing the small business sector needs."
Mr Fielding said electricity and gas prices have risen by 51 per cent and 43 per cent respectively since 2002.
The business and employers' organisation IBEC said: "Energy costs are already significantly out of line with competitor countries and further increases would affect Ireland's ability to compete globally and attract foreign direct investment."
Labour's energy spokesman Tommy Broughan said: "Consumers and businesses cannot sustain more increases of this magnitude, which are in effect another stealth tax."
