Secretary general of the Department Geraldine Tallon, said it was up to county councils to move schemes forward once funding had been approved.
She was responding to questioning from Fine Gael deputy Padraic McCormack, who said the department should have cracked down on Galway City Council for leaving parts of the city around Terryland without safe water.
Ms Tallon told the Oireachtas Committee on the Environment budgets had been sanctioned for water improvement projects under the National Development Plan but the Department could not manage them directly.
She told the Committee despite upgrade works many householders around the country still had to boil water before it was safe.
A list mentioned at the committee revealed more than 41,000 people drawing from 18 different water schemes are now being advised to boil water to avoid contamination from the likes of E-coli and Cryptosporidium.
The longest suffering residents are in Ennis, Co Clare, where the Drumcliffe treatment plant has been subject to a boil water notice for almost four and a half years.
A further nine areas have been under a notice for more than six months with the majority of boil water orders concentrated in Galway, West Cork and Kerry.
The Environmental Protection Agency was also represented at the meeting and said it was policing county councils which did not adhere to European standards. The EPA said it issued more than 100 warnings to local authorities on the quality of water being provided.
Galway County Council has been successfully prosecuted. And the EPA is awaiting a judgment in a case against Clare County Council.
Its director, Mary Kelly, said in the majority of cases authorities brought themselves into line once a directive was issued.
In cases where it was not resolved satisfactorily Ms Kelly said it was prepared for prosecutions.
However, the department indicated future funding projects are likely to suffer from budgetary constraints.
Ms Tallon said the entire water service upgrade programme, included in National Development plan, was to cost €4.7billion.
This included €1.1bn of contributions from development levies.
However, she admitted there was likely to be difficulty meeting this because of lower levels of development and the difficulty chasing down monies due to local authorities.
After being quizzed by Roisín Shortall of the Labour Party, officials outlined the case of Dublin City council where 64 enforcement orders had been issued against developers who had not paid levies due.