Plans to reform the Water Service have proved controversial

It applies to those on benefits or pensions and some homes are also to get water meters.

The first bill in 2007 could be as low as �60 rising to �180 in 2010.

In addition, there is a drop in the overall charge for all households, with the average bill now �310 which is �30 less than previous estimates.

The move marks a dramatic change of strategy by the Department of Regional Development and follows a period of public consultation.

There will be a limited introduction of water meters with pensioners getting the option to have their bill based on metering rather than the value of their house.

Meters will also be standard on all new houses from 2007.

Regional Development Minster Shaun Woodward said it was a "clear indication of how government had listened to concerns that charges had to be fair and affordable."

The next three years must be used to deliver a lower bill for all consumers Eleanor Gill Consumer Council

He said: "I am very concerned that we need to help people prepare for these charges, even though people in Northern Ireland will pay no more than the average paid by anyone else in the United Kingdom.

"Because we want to help people we will phase the charges in over three years.

"I can tell people now who qualify for this protection that when their first bills arrive in April 2007 the most that they will have to pay will be �60 and many will pay as little as �30 in that first year.

'Lower bill'

"I can also announce that bills here will be set in line with average bills in England and Wales which means that the average bill that will be landing on doormats in Northern Ireland in April 2007 will be just over �100. "

"Overall, I believe that the package of measures that I have announced today will deliver charges which are fair and affordable for all sections of society. "

Under the previous proposals almost half the pensioners in Northern Ireland would have found themselves in water poverty Help the Aged

The Consumer Council welcomed a government-funded �30m scheme for vulnerable water consumers - the first of its kind in the UK.

Chief Executive Eleanor Gill said: "This unprecedented protection package stops water poverty before it starts - a welcome breakthrough."

But she said although the average bill would be �31 less by the time the full water charge is being paid in 2010, it was still not low enough.

"The next three years must be used to deliver a lower bill for all consumers," she added.

Kieran McCarthy of the Alliance Party welcomed the scheme and said his party had been campaigning for a fairer form of water charging.

"However, the government's main plan is still to charge you on the value of your home, and this is unfair," he said.

The SDLP's Margaret Ritchie said while the protection for low income families was welcome, the charges should not be introduced at all.

"They fail to recognise the simple fact that water charges are wrong, that we are already paying and that there is no support for their proposals," she said.

Sinn Fein's Raymond McCartney said money from rates "should have been invested in our water services and not squandered by successive British administrations".

People were now being asked to pay "for the Northern Ireland Office's failures", he said.

Mr Woodward said bills will be in line with England and Wales

However, Help the Aged welcomed the announcement and said it had campaigned to ensure adequate measures were put in place to protect older people.

Policy officer Joleen Connolly said: "Under the previous proposals almost half the pensioners in Northern Ireland would have found themselves in water poverty."

However, the We Won't Pay Campaign said the announcement was in reality "introducing a 3% cut in income for those on benefits through water charges".

"A 3% cut in income may not sound much to well-heeled ministers with income in excess of �100,000 a year, but for people on benefits this will push them even deeper into poverty and hardship," said a spokesman.