The Government has ceded ground on the upcoming IBRC inquiry and is now prepared to allow a senior judge to examine the strained relationship between the toxic bank and the Department of Finance.
Finance Minister Michael Noonan is also expected to widen the terms of the reference of the inquiry to ensure that certain transactions executed after IBRC's liquidation in 2013 can be probed.
The inquiry is due to dominate today's Cabinet meeting as ministers become increasingly concerned that the issue is damaging public confidence.
But there will be no budging on the December deadline for the report into the way IBRC dealt with loans to up to 40 businessmen, including Denis O'Brien.
The Government has also stood by its decision not to provide for a separate report into the sale of Siteserv.
Government figures have said that looking at just a single transaction in isolation could present a distorted picture.
Nonetheless, Mr Noonan ceded ground in a number of areas relating to the inquiry following meetings with Opposition leaders last night.
Significantly, the senior Fine Gael politician said he would examine widening the scope of the inquiry to deal with the relationship between the former Anglo Irish Bank and the Department.
Sources emphasised, however, that this would focus on the level of oversight from the Department in relation to certain transactions. "It will not be extended to deal with issues of personalities," said a Government source.
The strained relationship between the department and IBRC figures have emerged in recent weeks through documents released under the Freedom of Information Act.
Speaking after his meeting with Mr Noonan, Fianna Fáil leader Micheal Martin said the minister indicated he would examine how to bring the department under the scope of the inquiry, which will likely be led by judge Iarfhlaith O'Neill.
"We have also been given a commitment that the relationship between the Department of Finance and IBRC would be examined, although the exact manner in which that was going to be determined in the terms of reference had yet to be decided," he said.
Independent TD Catherine Murphy and Sinn Féin deputy leader Mary Lou McDonald both indicated the meeting with Mr Noonan was constructive.
Ms Murphy was informed by Mr Noonan that transactions that were executed beyond the bank's liquidation in 2013 will also be considered by the judge.
"I was concerned about the timeline concluding with the liquidation of IBRC and it intended to conclude with the liquidation of IBRC. But they are looking at making provision for things that have a natural follow over or need to have a natural follow over. That is really very important," Ms Murphy said.
This was confirmed last night by Government sources who insisted the judge would be given the flexibility required to examine transactions as he deemed appropriate.
Ms Murphy also suggested she was satisfied with information provided by Mr Noonan in relation to the size of transactions set to come under the inquiry's scope.
The Government was criticised after the terms of reference said only transactions greater than €10m would be examined.
But the Kildare TD said she was assured that smaller transactions that add up to €10m when accumulated would be considered.
Mary Lou McDonald insisted the inquiry must address the public concern about IBRC.
"We emphasised to the minister the need to act speedily in the interest of public confidence," she said.
"He (Michael Noonan) listened carefully to what we had to say. We did the meeting with him on the basis that it is a genuine consultation."
The Dáil will this evening debate the terms of reference with provision in place for a further debate tomorrow.
Scope: The Government has proposed that the inquiry focus on transactions and decisions made between January 2009 and February 2013. The Government will pledge that transactions which began prior to 2013 but were executed following liquidation can be examined.
Transaction threshold: The inquiry is to focus on transactions above €10m. The Opposition claims that the figure should be much lower, however, Government sources say they must avoid a scenario whereby a raft of mortgages and loans to small businesses come under the spotlight. In his meeting with Opposition leaders, Finance Minister Michael Noonan said the judge will have the flexibility to look at smaller transactions.
Early report into Siteserv: Independent TD Catherine Murphy has called for an interim report into the sale of Siteserv. But Government figures have argued that the move could cause difficulties. They have said that looking at just a single transaction in isolation could present a distorted picture.
Extending inquiry into relationship between IBRC and Department of Finance: The judge will be allowed to examine relationship in terms of certain transactions.