Almost 900,000 people who claimed the €100 water conservation grant to offset the cost of their bills face losing the payment for this year.
Health Minister Leo Varadkar has raised the prospect of a new subsidy scheme for pensioners and people on social welfare.
This would put the €100 grant payable to all householders in doubt.
The Department of the Environment has confirmed that no decision has been made on whether the payment will be made for 2016, saying it was a matter for the incoming government.
Last December, Environment Minister Alan Kelly told the Dáil he would be "reviewing" the operation of the 2015 payment before setting out the arrangements for payment this year.
However, a decision was not made, meaning the grant is now in limbo.
Fine Gael and Fianna Fáil have faced a major backlash over suggestions they could abandon water charges altogether, but not refund families who paid their bills.
After days of controversy, both parties are desperately backtracking on the proposals - with Health Minister Leo Varadkar indicating there is no way Fine Gael would consider abolishing or suspending the charges.
But Mr Varadkar did raise the prospect of a new subsidy scheme.
"There are certainly things that could be done around free allowances. Things that could be done to assist people on pensions or social welfare - but the basic principle of water charges can't be departed from," he said.
Mr Varadkar said that over 60pc of people voted for parties that accept water charges in principle.
Sources told the Irish Independent that Fine Gael is willing to "compromise" on the detail of how the charges work and "to talk about the burden of water charges, especially for people on fixed incomes".
Meanwhile, Fianna Fáil said yesterday that they still hold the belief that water charges should be suspended for five years but the party is no longer describing this as a 'red line issue'.
Their finance spokesman Michael McGrath said "irreparable damage" has been caused to Irish Water and the current political vacuum was inflicting further damage.
He denied the uncertainty over its future would lead people to stop paying their charges in huge numbers.
However, the latest fiasco has resulted in both of the main parties being accused of abandoning their voters in the wake of the General Election.
Seamus Boland of Irish Rural Link told the Irish Independent that Fianna Fáil and Fine Gael have treated people who obey the law in a "cavalier way".
"Those people are now forgotten by the parties that they elected to represent them.
"Those people are now being thrown to the wolves. Many people are feeling completely unrepresented," he said.
Pat Spillane, who headed up the Commission for Economic Development of Rural Areas (CEDRA), said the parties need to focus on the real issues affecting families.
"Too many people in power tend to think of farming when you talk about rural Ireland. The reality is 2.5 million people, representing over 60pc of the population, live outside our five major cities and only 400,000 of them are engaged in farming," Mr Spillane told the Irish Independent.
"Rural development was too low on the food chain," he added.