The Government has come in for sharp criticism from opposition parties for sanctioning a 9 per cent rise in VHI premiums.

Fine Gael spokesman on health, Mr Gay Mitchell, described the premium increase as outrageous and said he would be calling for the Minister for Health, Mr Martin, to appear before the Oireachtas Health Committee to justify the increase.

Mr Mitchell also said he was seeking an independent audit of the VHI's cost base and accused the Minister, who refused a request for a 9 per cent rise last year but subsequently sanctioned a 6 per cent increase, of doing a "cosy deal" with the VHI this year.

Labour party health spokeswoman, Ms Liz McManus, said the announcement of more expensive premiums for VHI members was indicative of the need for a new departure in terms of health funding.

She said that a universal health insurance system offered the best solution to the growing problems of funding the health service. "The two-tier healthcare system, where the ability to pay guarantees treatment, is unsustainable."

The Department of Health said the increase had been sanctioned this year mainly to allow the company to build its reserves. Last year, fears that such an increase would further exacerbate inflationary pressures in the economy, drove the Minister to exercise his powers to veto such an increase.

The Irish Patients' Association said it was concerned the increase would price the elderly or retired members of the VHI out of the healthcare market. Meanwhile BUPA, the British healthcare insurer operating in Ireland, said the VHI increase means that its policies are now being offered at a major price differential to the State-owned insurer.