The Rural Water Programme has had its annual funding increased by €5 million, bringing its budget for this year to €135 million.
The money will be used to help upgrade and maintain some 728 private group water schemes around the country earkmarked under the Action Plan for Rural Water Supplies.
The plan was drawn up following legal action by the European Commission in 2002, which followed the identification of shortcomings in water quality by the Environmental Protection Agency (EPA).
The EPA said last November that 40 per cent of public drinking water supplies were not meeting required standards to protect against cryptosporidium contamination.
Announcing the increased funding today, Minister of State for Environment and Energy Tony Killeen said work had been completed on 70 per cent of the specified water schemes by the end of last year. These were now providing clean water to 67,000 households.
The priority for 2008 will be to finish work on the remaining supplies and maintain standards on existing schemes, he said.
Some €91 million will be spent by local authorities this year on improving water quality in group water schemes that depend on private sources such as rivers, lakes and boreholes.
The remainder will be used to develop new group schemes and to extend and improve small public water and sewerage schemes.
The largest allocation - €25.7 million - goes to Co Galway, where there was a serious contamination of cryptosporidium in drinking water last year. Co Mayo will get €16.185 million, while Co Roscommon will receive nearly €7.9 million. Every county except Dublin has been allocated money.
Mr Killeen said he was also making a €10 million contingency fund available for use on "certain public water supplies with potential quality issues", as identified by the EPA.
The Rural Water Programme is funded under the National Development Plan 2007. The Government has spent €765 million on new water and sewerage infrastructure for rural communities over the past decade, Mr Killeen said.