Fifty percent of the sewerage system will be at capacity within a few years if current funding levels continue, NI Water has warned.
The agency wants £2.5bn over the next seven years to upgrade wastewater infrastructure, including an urgent £1bn to tackle provision in Belfast and make sure new connections will be delivered after 2021.
NI Water has notified local councils that it may not be able to accept any new connections as early as 2027 without the injection of extra funds.
"Northern Ireland's wastewater infrastructure is at serious risk and nearly every main urban area is impacted," said Mark Ellesmere of NI Water in a letter to Mid and East Antrim Borough Council.
And Steve Blockwell of NI Water told Mid Ulster District Council that if funding continues at current levels there will be "significant constraints on economic growth, damage to the environment and risk to people's health".
The New Decade, New Approach deal states the Executive will invest "urgently in wastewater infrastructure", adding that infrastructure will allow the Executive to invest in a range of potential capital projects, including essential sewerage investment.
Infrastructure Minister Nichola Mallon, who is opposed to the introduction of water charges, has echoed the call for urgent investment in wastewater capital works, but she added in an interview with the Belfast Telegraph that there are no cast-iron guarantees on funding.
"I'm very keen that it has to happen because if we don't invest in our wastewater infrastructure then we cannot meet a number of the Programme for Government objectives," she explained.
"It's the key to unlocking our potential and it's the key to unlocking investment and growth."
Agriculture Minister Edwin Poots recently raised the possibility of water charges, potentially under pressure from the Treasury.