The €100 water conservation grant available to everyone who registers with Irish Water will only be provided to people who actually pay their bills under new measures being considered by the Government.

The move is one of a number of changes being discussed as the Coalition attempts to cast the roll-out of water charges as a longer term project which could take a decade.

The Eurostat ruling that Irish Water must remain off balance sheet has prompted the rethink, which is an effort to settle Coalition policy in advance of the forthcoming general election.

It is understood Minister for the Environment Alan Kelly will present revised measures to Cabinet when ministers return after the summer break.

The Irish Times understands the proposed changes include linking the €100 water conservation grant to bill payment rather than registration with the company, and significantly extending the period for which the existing water charges caps will apply.

Irish Water will also be tasked with bringing down its operating costs, including reducing its workforce at a quicker pace than initially anticipated.

Currently, people only have to register their details with Irish Water in order to qualify for the €100 water conservation grant from the Department of Social Protection and do not have to prove they have paid their water bills.

It is understood linking the €100 grant to bill payment has been discussed but there is no definite timeframe for when this will apply.

However, it would not be until 2016 at the earliest since the €100 grant in respect of 2015 will be paid from next month.

It is understood there are no plans to scrap the conservation grant, which was criticised by Eurostat.

“It will remain, not least for the people on group water schemes who are paying,” a source said. “We will link it to payment but there is no timeline.”

Fine Gael and Labour have effectively accepted the "likely scenario" is Irish Water may not be considered an independent entity by Eurostat for another decade.

The Eurostat ruling has effectively removed the immediate need to have Irish Water operate as an independent semi-state company and provided leeway for the latest changes.

Sources said the existing water charges caps of €260 per family and €160 for a single adult home will apply for “considerably longer” than the initial timeframe of 2019, and are likely to be in place for at least a decade.

The cost of water charges drops to €160 for a family and €60 when the water conservation grant is included.

The water charges caps were also criticised by Eurostat in its ruling. It cited a “lack of economically significant prices, concerning in particular the capping of fees for households, with 70 per cent of households expected to be protected by the price cap”.

The Government had already announced that a permanent water charges cap would be enshrined in legislation, but the level at which the cap would apply was due to be reassessed from 2019.

Sources said the caps will not be altered “until all meters are rolled out, people are consistently beating the cap and the capital investment has shown tangible improvements”.

Earlier this summer, Irish Water announced 43 per cent of homes had paid their water charges so far, yielding 46 per cent of expected revenues for the company.

Eurostat also highlighted the low compliance rate to date in its ruling. Government sources have expressed hope the compliance rate will rise to 60 per cent by the time of the general election.