More than £577 million is being planned for investment by Northern Ireland Water (NIW) in its pipes and other equipment over the next three years.
Another £615.4 million will be used on operating costs. Funding will be regularly reviewed and will consider issues like dealing with emergencies.
Major continued investment is needed to further improve the quality of drinking water and secure better wastewater services including reducing the problems of sewer flooding and low water pressure and by improving the environment with cleaner beaches and rivers.
Considerable levels of expenditure are needed to meet challenging EU compliance targets for wastewater treatment.
Utility Regulator Iain Osborne and NIW confirmed that the price control of 2010-2013 had been accepted by the Department for Regional Development. There will be no ringfencing of expenditure in areas like voluntary early retirements or from public private partnerships, thus any savings can be applied to other parts of the business.
A total of £615.4 million has been earmarked for NIW in nominal operating spending over the three-year period, with expenditure dropping from £214.9 million this year to £195.7 million in 2012/13. A total of £577.5 million is planned in capital investment.
Mr Osborne said: "PC10 has set NI Water challenging capital and operational efficiency targets, alongside the delivery of clear outputs for the 2010-2013 period. We look forward to working with NI Water to deliver on these targets in the interests of consumers."
NIW has invested significant sums in overhauling its wastewater treatment works across Northern Ireland and Belfast sewers.
Laurence MacKenzie, chief executive of NIW, said it accepted the price control following a detailed review of the regulator's proposals.
He said: "We have been through a thorough process with the PC10 settlement representing a significant challenge for the organisation. We are confident we can meet the challenge through continuing to seek efficiencies in the way we deliver our services."