Tens of thousands of families will see their accommodation bills effectively frozen as the Government moves to tackle repeated rent hikes by landlords.
The Attorney General has cleared the way for the introduction of temporary rent controls in order to stabilise the rental market.
Environment Minister Alan Kelly has been given the green light to introduce measures which will tie rent to the rate of inflation - in a move that will give tenants certainty surrounding their living costs.
Setting rent against inflation is likely to cause concern in Fine Gael, whose ministers are sceptical about introducing measures that will be dubbed as rent controls.
But Labour Party sources insist the move is essential to tackle "scandalous" rent hikes by landlords and to ensure young couples do not fall into so-called "rent traps".
Tackling spiralling rent prices is seen as one the last major Government policy decisions required before the Coalition decides to call a General Election.
An estimated 305,000 households are currently renting in Ireland, with a third of people in this category unlikely to be able to afford to purchase a home in the future.
The new rent plan will also contain incentives for landlords who carry out refurbishment work on their properties and who agree to enter into longer 'continental-style' leases with their tenants.
"By tying rent to inflation, you are giving families certainty over their bills for a number of years - that's crucial to giving them a sense of security," said a Government source.
Mr Kelly is expected to seek Cabinet approval for his proposals in the coming weeks.