A new report has found raw sewage is being discharged into rivers, lakes and coastal areas in 45 locations around the country.
The Environmental Protection Agency has also found that those waste water discharges are contributing to poor water quality at seven Irish bathing spots.
This Urban Waste Water report from the EPA shows that of the areas where raw sewage is being pumped into watercourses and coastal areas, more than half are in Cork, Donegal and Galway.
In the 45 places listed, waste water received no treatment or just preliminary treatment before being discharged.
It is having an effect on the quality of bathing water in a number of areas - including Clifden and Ballyloughane beaches in Galway, and Youghal Front Strand in Cork.
The report also shows that 31 larger towns and cities, including Dublin, are failing to meet European Union standards.
The EPA also says operational improvements are required in 57 urban areas that are said to have sufficient treatment capacity, but did not meet effluent quality standards.
EPA Inspector Noel Byrne outlined the report's finding on Newstalk Breakfast earlier.
"There is potential for [EU penalties]," he explained. "We're very late in Ireland in implementing the [Urban] Waste Water Directive and getting into compliance with the directive, the Commission currently have issued Ireland with a letter of formal notice in relation to 70 plants for non compliance".
Byrne also highlighted the recent fines issued to Greece of more than €10m - along with regular six-monthly fines - and said that "the potential is quite significant for Europe to take a harsh stance in relation to this".
Mr Gerard O’Leary, Director of the EPA’s Office of Environmental Enforcement, said "a reversal of the decline in capital expenditure seen in recent years is needed to eliminate the discharge of raw sewage from our environment and allow Ireland to meet EU standards".
However, the agency points out that 82% of large urban areas here are meeting the EU standards - up 8% on the figures two years ago.
In a statement, Irish Water says the discharge of untreated sewage at 45 urban locations will end by 2021.
The company says it plans to invest another €2bn in wastewater infrastructure over the next six years.
