The country's 300,000 public servants are in line for income boosts of up to €1,000 next year as a result of an immediate reduction in the deeply unpopular pension levy, according to Government sources.
And further similar increases are expected to follow in 2017 as part the pay deal being thrashed out with trade unions.
Talks have progressed significantly throughout the day after the draft text of the agreement was agreed between both parties.
Sources say central to the pay deal is the introduction of changes to the pension levy which will take effect from January 2016.
The levy was the first measure introduced under the Financial Emergency Measures in the Public Interest Acts 2009-2013, known as FEMPI.
It has been the source of a lot of anger among public servants.
There will also be pay increases for lower paid workers, the details of which are being thrashed out this evening.
A senior Government source insisted, however, that public servants will be expected to engage in reform.
The new draft agreement involves the extension of, and the recommitment to the flexibilities existing in the Haddington Road Agreement, the source said.
it also involves a strengthening of mechanisms to facilitate ongoing reform and change.
"The relationship between pay and reform remains and will not be broken," said a senior source.
A senior union source said the overall shape of the pay deal should be agreed by this evening.