Irish Water plans to take more than 300 million litres of water a day from the River Shannon before pumping it across a 165km pipeline to provide a new supply for Dublin and the Midlands.
The company will today announce plans to take 2pc of the river's water from the lower Shannon at Parteen Basin, near Limerick.
It aims to provide a new water source for counties Clare, Tipperary, Offaly, Laois, Westmeath, Kildare, Meath and Dublin.
It will cost between €700m and €900m to deliver the plan, which could be built within five years. But crucially, the scheme does not include a storage facility on Bord na Móna lands in the Midlands, where a planned water park was mooted.
Instead, Irish Water has decided that the best option is a single pipeline which counties can tap into.
Planning permission will be sought from An Bord Pleanala in 2017, and if approved the scheme is expected to be operational by 2022.
Affected landowners will receive a one-off payment for allowing the pipeline through their lands.
Four options for a new source were considered before being whittled down to two, one of which was to desalinate sea water.
However, desalination was ruled out on cost and environmental grounds, and because it would only serve Dublin and not deal with shortages across the Midlands.
Some 1.6 billion litres of water are currently produced by Irish Water every day, of which around 600 million litres are used in Dublin.
However, there is little spare capacity in the system, meaning that in the event of a problem with treatment plants, the city can run short - which notably occurred during the 2013 Web Summit.
"The present infrastructure is struggling to meet current need, as evidenced by a number of significant and costly outages in Dublin over the past four years," Irish Water said.
"While fixing leaks and water conservation initiatives will provide valuable water savings, this will not provide a long term solution for our water supply requirements."
The additional water will provide much-needed headroom for the capital, but also cater for future population growth. However, stiff local opposition is expected to the Shannon plan.
Irish Water said the total amount to be drawn would be just 2pc of the river's flow, which would ordinarily be used by the Ardnacrusha hydro-electric power plant to produce electricity.
Around 1,000 construction jobs will be created, with 21 full-time and 80 part-time positions becoming available once operational.
Bord na Móna is also expected to be bitterly disappointed at the decision to rule out a Midlands storage option.
It had hoped to create an eco-park on the Garryhinch bog, on the Offaly-Laois border, where water drawn from the Shannon would be stored before being pumped to Dublin.
John Tierney, managing director of Irish Water, said the new supply was needed to provide for future economic development and population growth.
"This project is not simply about finding a solution for Dublin's future water supply, it is also about ensuring that the entire country can thrive by facilitating growth," he said.
"Parteen Basin can deliver a sustainable water supply with the least environmental impact while benefiting the widest number of domestic and commercial water customers."
Parteen Basin has been deemed the most suitable location because it is at the mouth of the river, with most of the water having already flowed through the Shannon.
The closing date for submissions is February 4. See www.watersupplyproject.ie