Tackling spiralling rent bills in urban areas is the single greatest challenge now facing the Government, ministers believe.
Talks between a number of Government departments about introducing rent controls are to continue next week.
Environment Minister Alan Kelly has been given the green light by Attorney General Maire Whelan to tie rent to inflation.
The move will effectively see rent bills frozen over a period of time in a move that will come as a huge relief to tens of thousands of households, particularly those in urban areas.
Setting rent prices against the rate of inflation will be introduced as a temporary rent control measure.
The measure is part of a rent package being finalised by Minister Kelly which is expected to be brought to Cabinet in the coming weeks.
Sources confirmed that the package will involve a carrot-and-stick approach whereby incentives are offered to landlords who enter into 'rent certainty' style agreements.
But ministers last night insisted that tackling rent is now the single biggest issue facing the Coalition before the General Election.
"If we get this right, we will provide surety for thousands of families and young people who are concerned about their rent going through the roof," said a Fine Gael minister.
A senior Labour source said it is important that landlords are also incentivised to enter into long term deals with tenants.
"This is the single biggest issue facing the Government right now," the source told the Irish Independent.
An estimated 305,000 households are renting in Ireland, with a third unlikely to be able to afford a home in the future.