Mr Rabbitte now says he was never advocating a default when he said the €3.1bn of Anglo debt due in March would not be paid.
He also suggested the "constant denigration" of politics by the media could lead to the emergence of a dictatorship in Ireland.
Last month, Mr Rabbitte insisted the next instalment of the Anglo promissory notes would definitely not be paid.
"We didn't pay the promissory note this year and as far as I am concerned we are not going to pay it next year – it's as simple as that," he said at the time.
He was left isolated by other ministers after the comments, with Taoiseach Enda Kenny, Tanaiste Eamon Gilmore and others only saying they hoped a deal would be done with the European Central Bank before the March deadline.
It also led to a reported cabinet bust-up between Mr Rabbitte and Finance Minister Michael Noonan.
But Mr Rabbitte is now denying he was advocating a default.
"That's not what I said. What I said is that we wouldn't be paying it and that's a different matter to trying to present my remark as default," he told Newstalk radio yesterday.
He then adopted the same stance as Mr Kenny, Mr Gilmore and other ministers.
"I believe that by March 31, we won't be paying it and I've explained many times in the past the reasoning behind that. Ireland was in first. We took a big hit for the team, so to speak. There was no sharing as a result of the stand we took. . .
"Until the negotiations are concluded, I'm not going to get into the business of suggesting what the outcome might be."