The Tanaiste, Ms Harney, has instructed An Bord Trachtala not to progress its search for a senior communications executive until a review of the organisation now underway is completed. The move signals that the Tanaiste is seriously considering the future of the trade board, which is now being studied by a review group.

Among the options under consideration is a merger of An Bord Trachtala with Forbairt, to create one agency responsible for developing indigenous industry. Ms Harney's Department of Enterprise, Trade and Employment has been in contact with the trade board about the proposed new appointment, which was to be on a contract basis. The Department has told the board not to go ahead and the agency has agreed, according to a spokesman for the Tanaiste.

A source close to the Irish Trade Board insisted that the proposed appointment was designed to help position Ireland internationally as a centre for industrial excellence and to help promote the overall image of business with influential international media.

The move was not related to the fact that a review of the organisation was underway, the source insisted, and the agency was still looking at increasing its efforts in this area of positioning Ireland internationally.

It is understood that, after approval by its board, chaired by Mr Sean Murray, the agency had made an offer to one executive - currently working in the financial services sector - but that this person eventually decided not to proceed. The Tanaiste, however, is understood to have been concerned about the developments in the light of the review and, after seeking clarification from the agency, she has now asked it not to proceed with any new appointment in this area.

The future of all the industrial State agencies is being considered by a group comprised of civil servants, Mr Seamus McKenna and Mr John Walsh from her Department and Mr John Travers, the chief executive of Forfas. The three are expected to report shortly to the Tanaiste. After that Ms Harney would have to get Cabinet approval for any changes.

Among the issues the group is considering are the future of the Irish Trade Board. One option would be to bring it more directly under the co-ordination of Forfas, the umbrella body which advises on policy and oversees most of the other agencies. However, some sources believe that Ms Harney may decide on a full merger of Forbairt and the Irish Trade Board.

The review follows the decision by the Fianna Fail/Progressive Democrat coalition to move the trade portfolio back with Enterprise and Employment into one large Department. Speaking in the Dail shortly after her appointment, Ms Harney said that the inclusion of trade in her portfolio provided the basis for a more integrated system of support for company development.