Agreement has been reached between Kerry County Council and a Department of Environment inspector on the scale of a scheme for the densely-populated Kilcummin area, near Killarney.
An onsite meeting was described as robust by senior executive council engineer Maura Joy.
Critically, the preferred option now is to pipe the sewage directly to the Killarney treatment plant, which discharges to Lough Lein, rather than building a plant in Kilcummin.
Most houses in the immediate area are served by septic tanks and the new scheme is expected to include houses, also with septic tanks, between Kilcummin and Killarney town. The Kilcummin scheme was set to go ahead in 2007 but the contractor was forced to withdraw for health and safety reasons.
Delays have since led to a high level of frustration and anger locally.
The scheme was listed as a priority in a campaign to tackle pollution in Lough Lein, a key tourist attraction and the biggest of the three famed lakes of Killarney.
Welcoming developments, Cllr Michael Gleeson said there had been an “almost eternal delay” in progressing the scheme, while Cllr Breeda Moynihan Cronin said it would have been “absolutely stupid” to build a treatment plant in Kilcummin.
Revised plans are to be submitted to the department by the end of next month.
Meanwhile, residents of the Aghadoe and Tralee Road areas of Killarney will have to wait for connections to the public sewer, also seen as essential for protecting Lough Lein.
The areas, which have hundreds of homes and several hotels and guesthouses, were included in the Killarney main drainage scheme in 2010.
However, a plan to extend the public sewer to Aghadoe /Tralee Road is not included in the 2012 investment programme.