Former minister Seán Canney is to leave the Independent Alliance.
The Galway East TD has today announced he is to disengage with the group headed by Transport Minister Shane Ross.
However, sources told the Irish Independent he has been in talks with Taoiseach Leo Varadkar about a deal to continue supporting the Government.
Mr Canney has spent more than a week considering his position after a falling out over a junior ministry.
He wanted to be reinstated as a minister of State in the Department of Finance but his colleagues decided the role should remain with the incumbent Kevin 'Boxer' Moran.
The move comes almost exactly two years to the day since the Independent Alliance agreed to enter a Coalition with Fine Gael.
When the Government was formed in May 2016 the five Alliance members were offered a total of four ministries.
Two Cabinet positions were taken by Mr Ross and Finian McGrath, while John Halligan became a junior minister at the Department of Education.
The final position was to be shared by Mr Canney and Mr Moran, who are first-time TDs.
They flipped a coin to decide who would take the role of Minister for Flood Relief for the first year, with Mr Canney winning.
The office was handed over to Mr Moran last summer, but there has now been a dispute over who will be the minister for the year ahead.
"Nobody really expected this Government to last over two years and nothing was put in writing," a source said.
Last week, the five TDs met to discuss the situation with a majority deciding Mr Moran took the larger risk and therefore should stay on as minister for the duration of the Coalition.
Mr Canney does get a €15,000 top-up payment for serving as Assistant Government Whip. It is unclear whether he will be able to continue in this job when he leaves the Independent Alliance.