Fine Gael Senator Michelle Mulherin confirmed the project had been given the green light.
When complete, the scheme will benefit 80 homes in the area.
Senator Mulherin said: "I am delighted to confirm that the Kilmurray Group Water Scheme has been given the green light.
"This will help 80 local homes that have been waiting for the scheme since 2010, when CLÁR funding was abandoned by Fianna Fáil in government.
"The Kilmurray group water scheme has been allocated €25,000 under the rural water programme.
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"It will enable the scheme to commence necessary planning and proceed to construction in due course.
"As the scheme is now approved in the current programme cycle, which ends this year, it should carry forward to the next programme cycle, which is to run from 2019 to 2021."
She added: "I am delighted that the Kilmurray scheme has been approved and is now in the system.
"Funding is available to undertake the necessary construction works that will follow. It is now a matter for the scheme to proceed as quickly as possible.
"I will make sure this happens and will drive it on. Funding of €95m will be available for the next three-year cycle of the rural water services scheme.
"This is a major increase which has been provided under Project 2040. It has been secured to drive success and improvement under the rural water scheme.
"I will continue to work hard to ensure all local areas waiting for a group water scheme are catered for."
(CM/MH)
