Tanaiste Eamon Gilmore has challenged Irish Water to prove that 50 million euro spent on consultants' fees was good value for money.
As Fianna Fail leader Micheal Martin branded revelations of the multi-million euro payouts a "scandal waiting to evolve", the Tanaiste questioned the need for such an expense.
"I've seen the figure for the expenditure by Irish Water on consultants," Mr Gilmore said.
"It does seem to me to be a high figure and I think Irish Water will have to demonstrate that it represents good value for money, and that the expenditure was necessary as part of the set-up costs for Irish Water."
Chief executive John Tierney revealed today that Irish Water spent more than 50 million euro on consultants over the last year.
He said a total of 100 million euro had been spent in setting up the company - more than 50% of which was paid to consultants, which included large firms based in Ireland.
Mr Tierney said the company would have limited money to spend on consultants in the future, because it will have already hired in the expertise.
He told RTE that plans are on track for the company to be in operation by 2015 and that its rollout remained on budget.
But Fianna Fail's Mr Martin criticised the fledgling organisation, which will serve as a new national water utility as a state-owned subsidiary within Bord Gais.
He described it as a quango in the making and warned householders will end up paying the price.
He said the 50 million euro figure was "an extraordinary situation" and one that is likely to escalate.
He also claimed that local authorities are "completely in the dark" about the organisation and that they are losing staff to it.
"I think this is going to get bigger and bigger," Mr Martin said.
"And this Government, prior to the election and Phil Hogan in particular was a great man for saying he was going to cut quangos and reduce a number of so-called quangos and so on like that.
"He has created a hell of a one now and I think it's going to eat up resources, and ultimately the customer and the person in the house will end up paying for all of this."
People Before Profit TD Richard Boyd Barrett added that revelations about the 50 million euro paid to consultants was early evidence that Irish Water was yet "another trough for the pigs to feed from".
He claimed that struggling families and households would be forced to pick up the bill "for this greed and the theft of a public resource".
Irish Water was established to manage Ireland's water infrastructure.
It began rolling out water meters in households across the country last year, with initial water charges due to be applied in the last quarter of 2014.
The organisation has not yet decided on rates to charge. They are expected to be set in late summer.
The Tanaiste said rates will depend on the water metering system.
"The issue of charging for water has not yet been settled," he said.
"That is something that will be discussed later in the year and it is obviously dependent on the extent to which households will be metered, because it is of course connected with the metering system."
In a statement, Irish Water said its establishment was one of the biggest reform agendas undertaken in the public sector.
It said the 50 million euro (£41.4 million) spent on consultants' fees was for short-term specialist services which would not be required for the long-term running of the company.
The majority of the money spent was for developing IT business capabilities, it said, such as billing and customer service systems, financial management and asset management systems - all of which are "critical to ensuring Irish Water becomes a high-performing utility".
"This initial upfront investment is intended to provide a dividend in the medium-term and drive efficiencies across the sector resulting in significant savings over time," Irish Water said.
"The investment level benchmarks well against other utility transformations on this scale. These costs are being validated as part of the regulatory process. The establishment of Irish Water is on time and within budget."
It insisted that all external contracts were subject to a competitive tender and that service providers included IBM, Accenture, Ernst & Young and Oracle.