Gay couples will be recognised for the first time in the history of the State, but it will probably come at a cost to the taxpayer.
Same sex couples will be allowed to legally register their partnerships under new laws currently being drawn up.
The move will have implication for a "myriad" of people in other co-habiting relationships.
Gay couples in civil unions will be allowed to register their partnerships, which will then gain legal protection.
But the Government is holding back from giving gay couples the same rights as married couples.
Giving all gay and co-habiting couples the exact same tax benefits as married couples would cost anything up to €2bn a year.
The Government will now have to decide what tax advantages to give to gay and, by extension, co-habiting couples.
And if these couples are to be granted tax benefits, the coalition will have to decide how to pay for this move.
It can either take the hit in the coffers or go down the less likely route of making married couples pay more tax by removing the present tax advantages enjoyed by married couples, so that all income earners are treated the same.
It is not yet clear though exactly how far the legislation will go in terms of legal and tax recognitions. The knock-on effect of the move to recognise gay couples will be to give certain financial rights to economically dependent co-habitants at the end of their relationship.
The initial details of the legislation will be ready by next March and the measure will be enacted at some point before the next general election.
The Green Party was claiming victory on the issue, but Labour said the junior coalition partners had only got a vague promise to legislate at some time in the future.
The Government move came about because Labour again put its own Civil Union Bill on the agenda of the Dail.
Last time it was tabled by Labour, the bill had the full backing of the Greens.
Labour's own proposed Civil Union Bill went further than the Government's plan as it was designed to give same sex unions the same status as marriage. The Attorney General advised the Labour Party's plan would not stand up to legal challenge as it clashes fundamentally with the Constitution's recognition of the family and the status of married couples.
Justice Minister Brian Lenihan pledged to publish legislation next year.
The legislation will draw heavily on the Colley report setting out the options available to the Government and a report on the issue by the Law Reform Commission.
"It represents a recognition by Government of the many forms of relationships in modern society, and an important step very particularly for homosexual couples, whose relationships have not previously been given legal recognition," the Mr Lenihan said.