A letter from the Department of the Environment is reported to have accused Eurostat of misinterpreting "fundamental issues of fact" with regard to Irish water.

Irish Independent reports that it has seen an official correspondence sent from the Department to the Central Statistic Office (CSO) outlining potential failings in Eurostat's research.

The newspaper describes the letter as "hard-hitting" - the Department is now seeking clarifications regarding 26 serious concerns regarding the decision of the European body.

Before Eurostat ruled that Irish Water is not an independent corporation, the CSO had said that it was satisfied that it would remain off of Ireland's balance sheet.

The letter says that Eurostat's research contained a number of basic errors, including incorrect figures for the fines imposed on households who refuse to pay, and a miscomprehension regarding the number of staff directly employed by Irish Water.

It also argues that the Government's €100 conservation grant paid to households should not be counted as Irish Water funding.

The European body has described Irish Water as a reorganised local authority water system - the letter takes issue with this point:

"This totally ignores the massive transformation and reform programme underpinning the transfer from the local government sector to a regulated utility, supported by the introduction of charges for domestic water consumption."

The official Government line on Europe's ruling has been that it expects the body to pass Eurostat's test in the future as more houses pay their water changes.