A confidential report from the European Commission indicates it has concerns over Irish Water's finances.
Officials have warned of "uncertainty" surrounding the prospect of the utility passing the crucial market corporation test - which will determine whether the company can be kept off the Government's books.
The Irish Independent reports the document is critical of the government's revised water package, which is capped at €160 for all households.
The EC report is concerned that a lower than expected revenue collection from the charge has "diminished" the prospect of Irish Water being self-funded.