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Environment Minister Michael Kitt sanctioned the move, which will generally exempt households connected to group water schemes from having to pay for water.
The subsidies are designed to cover operational costs incurred by the 5,500 group water schemes around the country who supply drinking water for over 173,000 rural households.
Many groups have their own water treatment plants.
Reacting to the announcement, Clare TD Tony Killeen said: "All group schemes will now quality for a basic subsidy of €140 per house where the water is abstracted from the group's own source and €70 per house where the water comes from an extension of a local authority watermain."
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He said the new subsidies would come into operation immediately.
"The terms and conditions of eligibility for the subsidy have been structured to ensure that group schemes operate in an open and efficient manner that guarantees the best quality service and highest water quality to their members," said Mr Killeen.
"The scale of change in the group schemes sector in recent years had been enormous. Schemes have enthusiastically embraced the campaign to eliminate the sub-standard water supplies that had led to Ireland being found to be in breach of the EU Drinking Water Directive."
The TD acknowledged the contribution of group scheme activists who, he said, have worked tirelessly for the betterment of their neighbours and communities.
Group water schemes are community owned enterprises.
The group scheme movement has been active in Ireland since the 1960s and has provided piped water to many rural areas not served by local authority mains.
(PR/JM)
