Thousands of families in pyrite-riddled homes will be left in limbo despite a 50 million euro package for repairs, it was claimed.
Up to 1,000 properties in need of immediate works will be restored from exchequer funds over the next two years, at a cost of about 50,000 euro each.
Environment Minister Phil Hogan said an initial 10 million euro has been set aside by Government to kick start the redress scheme, with more funding to be announced in February.
But homeowners fear another 10,000 houses and apartments with evidence of pyrite will never be fixed as the structural damage to them is not deemed bad enough.
Peter Lewis, of the Pyrite Action Group, said it was important to prioritise people whose homes are crumbling around them, but warned those in the amber category, with less significant damage, must be looked after too.
"While they might not have significant damage in their property, their property is still unsellable, it's still damaged, and they're still stuck in limbo and they can't move on with their lives," said Mr Lewis, who was forced out of his pyrite damaged apartment in Santry with wife Sandra and son Adam.
"Ideally they should be brought in to the process and we will be pushing that agenda."
Mr Hogan said while the State is neither culpable nor liable for the pyrite problem, in the interest of the common good it will take responsibility to provide a solution for homeowners who were left with no redress after HomeBond withdrew its cover for pyrite two years ago.
"It would not be reasonable or defensible that affected homeowners, who have no viable option for redress, would be left without resolution," he said.
The fund is being offered alongside 10 million euro to make the condemned Priory Hall complex and 10 million euro to upgrade ghost estates.
The scheme will be implemented by the Pyrite Resolution Board (PRB), which is due to become a statutory body by the end of the year.
It will cover the 3,000 euro cost of owners having to leave their property and find alternative accommodation for up to three months while works are completed
But Mr Hogan warned it was a remediation programme and not a compensation scheme, so no homeowner will get redress for money spent to date on repair works or on alternative accommodation.
"It's a programme of last resort," he said.
"This is for people who have not been able to come to any conclusion or have no insurance cover."
Properties affected by pyrite heave have been identified in Meath, Kildare, Offaly, Fingal and Dublin City.
They include houses and apartments built after 1997, with the majority in the period between 2002 and 2007.
Board chairman John O'Connor said 700 people have already shown interest in the scheme since the online application process went live in July, with more expected to come on stream.
The list will be examined again in two years to see if any more properties are in need of severe repairs.
Pyrite, or iron pyrite, is a mineral also known as fool's gold. Where present in building materials - such as backfill used under floors - the mineral can swell over time causing buckling in concrete floor slabs, difference in flooring levels, cracking in internal walls and sometimes movement in outside walls.
Caroline Keane from Lusk, Co Dublin, criticised the new plan amid fears her home and many others will not be covered.
She said 10 million euro is a drop in the ocean compared to the scale of the problem, and stressed there are only two categories for homeowners - those with or without pyrite.
"They seem to be suggesting they will deal with 1,000 homes in a two year period and hope no more homes would materialise," she added.
"Everybody needs to have the defective infill removed. Our homes do not comply with building regulations."
The scheme replaces a previous plan previously announced by government to take a 50 million euro upfront loan from banks to fund the redress scheme, and charge a levy on quarrying and insurance sectors.
Mr Hogan said legal advice from the Attorney General revealed there were "constitutional difficulties" in placing a levy on specific categories of people for a particular purpose.
"It has to be borne out of general taxation or else it won't stand up legally," he added.