Irish Water has confirmed that no bonus payments will be made to staff for 2013 and 2014.
The company also confirmed that an independent review of the bonus scheme will be commissioned.
Staff in Irish Water are being briefed by management on the decisions.
The issue of executive bonuses or performance pay has bedevilled Irish Water, with almost a quarter of its staff apparently qualifying.
Ministers hope that this development will improve the public mood as they prepare to launch the revised water charges scheme tomorrow.