The deferral of water charges for 12 months will cost £75m - which will come from the extra cash promised to Northern Ireland by Chancellor Gordon Brown.

But the Executive, at its first meeting yesterday, also agreed to maintain its contact with the Treasury in an attempt to improve the peace dividend package.

First Minister Ian Paisley, Deputy First Minister Martin McGuinness and Finance Minister Peter Robinson are to continue the engagement with Mr Brown "to ensure that we get the best possible deal", an Executive statement said.

Mr Brown has now confirmed in writing the proposals which he has already made but the statement added: "This is not the end of the matter."

The anticipated postponement of water charges for 12 months was confirmed at the end of a three-hour meeting at Stormont castle.

The decision not to impose the proposed annual charges for water and sewerage during the financial year until the end of March next year will save the average household £100 over the 12-month period.

At their inaugural meeting, which was described as "cordial and relaxed" , ministers also agreed to a proposal from Regional Development Minister Conor Murphy for a comprehensive review of the investment in the water and sewerage service which the Executive agreed is badly needed.

The review which is to examine a longer term approach to financing water and sewerage services, is to be completed by the autumn

It will include the issue of the future of the Government-owned water company set up by Direct Rule Ministers.

"I think what we want to do with the review is put everything on the table again," Mr Murphy said.

The decision was welcomed by Ulster Unionist Fred Cobain, who chairs the Stormont committee which monitors Mr Murphy, and the Consumer Council.

"I have very real concerns about the way the Government-owned company was imposed on all of us by the Direct Rule Ministers without any proper examination of the alternatives," North Belfast MLA Mr Cobain added.

The Consumer Council said it hoped the short and focused review would answer fundamental questions such as whether the capital value of people's homes should be the basis for determining water charges.