Mr Varadkar said the Government shouldn't rule out a referendum on whether the threat of a woman's suicide should allow for abortion.
However, Mr Kenny directly told Mr Varadkar: "There will be no referendum, Leo."
Mr Varadkar was backed up in his calls by Wicklow TD Billy Timmins and senator Paul Bradford.
Mr Varadkar also criticised Justice Minister Alan Shatter for saying it was "not an option" to leave out the threat of suicide as a grounds for abortion.
But Mr Kenny also told his TDs and senators they would not be given a free vote on any abortion proposals that came through the Oireachtas.
He said he wanted to make those two things "very, very clear".
The abortion issue took up an entire three-hour meeting of the Fine Gael parliamentary party in Leinster House last night.
At the same time there was impassioned debate in the Dail chamber, where a Bill calling for the Government to legislate on the X Case was voted down by 101 votes to 27.
It was brought by United Left Alliance TD Clare Daly, and while roundly defeated, it sparked strong comments from the likes of Labour's Aodhan O'Riordan.
"My party, the Labour Party, have fought a lonely battle on this front for 20 years . . . Neither I nor my party have any apology to make in the course that we are taking," he said.
Health Minister James Reilly also attempted to play down concerns about the speed of the forthcoming Government decision on abortion.
Ministers are going to decide their approach within the next three weeks but some Fine Gael TDs and senators said this suited the Labour Party more.
Dublin Bay North TD Terence Flanagan told colleagues: "The Labour way is not the Fine Gael way."
TDS said there was a consensus at the meeting that legislation plus regulation would be the way to deal with abortion.
However there were disagreements on whether the threat of suicide should allow for abortion. Around 20 people spoke on the issue at the meeting with 15 of those also said to have serious reservations about whether the threat of suicide should allow for abortion.
But the Taoiseach said the only thing the Government would decide on before Christmas was the issue of how it would deal with abortion – whether it would legislate or regulate.