Homeowners will receive their money back by the end of the year
The Department of Housing, Planning and Local Government says some 990,000 Irish Water customers are due to receive refunds.
Minister Eoghan Murphy has confirmed that once legislation providing for refunds is in place, refunds will begin.
He says it is expected all customers will be refunded before the end of the year.
However some "exceptional cases" will be processed early next year.
The department says domestic water services account holders with Irish Water will be automatically refunded by the utility, by way of a cheque.
There is no application process involved and customers do not need to do anything.
It says customers only need to contact Irish Water if their details need to be updated.
Irish Water is to run an information campaign that will inform customers on the next steps.
Speaking following the first Cabinet meeting of the new term, Minister Murphy said: "The Joint Oireachtas Committee on the Future Funding of Domestic Water Services recommended equal treatment between those who have paid their water charges to date and those who have not.
"In keeping with the Government's commitment to implement the committee's recommendations, the Government will include a provision for refunds in forthcoming legislation, which it is intended to publish shortly."
A household of two adults who paid all five water bills will be due a refund of around €325. A single adult household who paid all five bills will be due €200.
Payments were made by homeowners to Irish Water between late 2015 and 2016, before charges were suspended.
It was part of a confidence and supply agreement between Fine Gael and Fianna Fáil to keep the Government in place.
Appendix 2 of the agreement reads: "The Government will facilitate the passage of legislation (whether it be a money bill or otherwise) for the implementation of the recommendations in relation to domestic water charging supported by the Oireachtas".
The Oireachtas Water Committee decided to scrap charges and approve refunds in April.
Its final report said: "The committee recommends that, following consideration of payments made by the State to date through the water conservation grant and the most effective refund methods, such households should be compensated in an equitable manner."
Taoiseach Leo Varadkar also said in July that the charges would be paid back.
Meanwhile the Water Conservation Grant is unaffected.
The department says this was a standalone, separate grant for all households - whether Irish Water customers or not.
"Its aim was to support conservation in the home and was distinct from domestic water charges. Therefore, the grant is not being deducted from refunds."