EAMON O Cuiv – grandson of Fianna Fail founder – has stepped down as Deputy leader of the party today in a shock development.
He also stood down as Communications spokesperson.
Party leader Micheal Martin issued a statement saying that he had accepted Mr Ó Cuív's resignation from these positions.
Mr Martin said that "Éamon's refusal to support the Parliamentary Party's position on the Fiscal Compact meant that it was no longer feasible for him to occupy these roles."
O Cuiv said it was "a matter of principle" for him. He will remain a member of Fianna Fail, and of the parliamentary party.
Earlier, on RTÉ Raidió na Gaeltachta, Ó Cuív said he had to decide whether he could go with the party stance, if that were to vote in favour of the referendum, or whether the question was so grave that he would have to go against the party.
He said the implications of that decision would mean leaving the parliamentary party.
This is a shattering blow to FF at a time when it is suffering in the polls and has been surpassed by Sinn Fein.
The Treaty poll – announced yesterday – is throwing up huge challenges for all the Dail parties.
Taoiseach Enda Kenny is facing his biggest challenge as leader of the country - to persuade voters to back controversial EU controls on our budgets.
He and his Government are gearing up for a difficult 10-week referendum campaign to win a 'Yes' vote on the tough new EU rules.
The rules would severely restrict borrowing and ensure governments balance the books.
Minister of State for European Affairs Lucinda Creighton said today that a 'No' vote in the proposed referendum would send out the wrong message to investors.
Speaking on RTÉ's Morning Ireland, Ms Creighton said the issue of a cheaper deal on the Anglo Irish Bank bailout and the economic treaty should not be linked and were separate issues.
Independent TD Thomas Pringle, who opposes the EU Fiscal Treaty, said that if the referendum were rejected it would not mean the end of Ireland's participation in the EU or the euro.
Mr Pringle also said he did not believe that the electorate would be confused by the debate.
Mr Kenny will come under intense pressure to secure a deal on Ireland's banking debt to offer as a sweetener to voters.
The campaign is certain to develop into a measure of the public's satisfaction with Mr Kenny's administration.
A wide variety of issues is expected to be thrown into the melting pot of a bitter campaign.
The referendum places a question mark over Ireland's future membership of the euro after Finance Minister Michael Noonan warned last month that this was on the line if we reject the tough new rules.
The Government is already insisting the question will only be put to the people once and there will not be a second referendum, unlike in the case of the Nice and Lisbon treaties.
Opponents of the fiscal stability treaty were already lining up last night calling for a 'No' vote. Mr Kenny's tough task begins today as he heads to Brussels for a crucial series of meetings with other EU leaders.
He will tonight seek to reassure EU heavyweights Angela Merkel of Germany and Nicolas Sarkozy of France that he can get the referendum passed.
He will meet several EU prime ministers tonight at a dinner outside Brussels ahead of a full EU summit tomorrow.
The Taoiseach rang a number of EU leaders yesterday to notify them of the Government's decision to hold a referendum.
Mr Kenny's spokesman could not say if senior EU figures were told about the referendum before he announced it in the Dail.
The Taoiseach will sign the treaty at the summit on Friday and then set about organising the referendum.
Within Cabinet there are differing opinions on when to hold the surprise referendum on the EU's fiscal compact. The tricky vote is expected to be held in May, but the Government has yet to confirm any date.
Government sources said there were different opinions expressed among ministers about the timing of the referendum with some wanting to delay to see what happens in the French presidential election at the start of May.
The EU referendum is most likely to be held on its own, with the referenda on children's rights and the abolition of the Seanad later in the year.
Mr Kenny said the Government had decided to hold a referendum following advice supplied by Attorney-General Maire Whelan that "on balance" the Constitution required the treaty to be put to a vote.
"It will give the Irish people the opportunity to reaffirm Ireland's commitment to membership of the euro," he said.
The Government's decision to hold a referendum follows a threat by Sinn Fein to challenge in the Supreme Court any decision not to give the public a say.
Following the announcement, economists warned of the important implications for the economy of the vote.
"There is a reasonable prospect that Ireland will need further funding in the future, and it may indeed come from the ESM (EU bailout fund)," Dermot O'Leary, chief economist at Goodbody Stockbrokers said.
Tanaiste Eamon Gilmore said the Government would only have one chance at putting a referendum to ratify the European fiscal compact to the nation's voters. "A second go doesn't arise in this case; there is one go at it," he said on RTE News yesterday.
Mr Gilmore said the Government was not seeking a deal from the country's European partners on lowering the cost of bailing out its banks as a trade-off to win Irish voters' backing for the referendum.
"It is not something we have ever seen as a quid pro quo," he said.
The Tanaiste said Ireland was separately in talks with the bailout troika on renegotiating the bank bailout costs.
The Government has been in talks with the troika on the repayment of €30bn of promissory notes in the former Anglo Irish Bank, now the Irish Bank Resolution Corporation.