More than £1 million a year will be withheld from TDs and senators who are also county councillors, the Minister for the Environment, Mr Dempsey, confirmed yesterday.
The news is likely to cause considerable anger among the 113 members of the Oireachtas who also hold local authority seats and believe they are entitled to the annual £10,000 salary-type payment.
Fianna Fail backbenchers were in revolt in June over the prospect of not being given the payment. The matter was raised at a weekly Fianna Fail's parliamentary party meeting and there was such a furore a special meeting was called that night.
At that time, the TDs and senators were told by the Minister for Defence, Mr Smith, who was standing in for the ill Mr Dempsey, that they could make representations to the Minister when he returned.
Some deputies and senators then said they felt Mr Dempsey was being "spiteful" and trying to punish them because he had to drop plans to end the dual mandate.
However, Mr Dempsey was adamant yesterday that, regardless of representations made to him, the payment would not be given.
"The theory behind this is that a person gets paid once for being a public representative."
He said if someone was elected to the Dail or Seanad they were paid a salary, travel expenses, an allowance for a secretary and living expenses.
"They have all those advantages over the councillors who get travel expenses only. It would be wrong to expect the taxpayer to pay on the double for the same job," he said.
In June, the Cabinet approved the plan to drop the proposed payment. The Progressive Democrats said they had agreed against their wishes to drop the dual mandate and that this payment would have been "a bridge too far".
The payment was part of Mr Dempsey's planned reform of local government, to be paid to county councillors once TDs and senators had been banned from local authority seats.
However, his plans to abolish the dual mandate were scrapped in June following a threat by the four Independent TDs to end support for the Government.
Mr Dempsey said that initially he did not believe the payment was necessary for councillors but that he had been convinced otherwise.
"What changed my mind in relation to it was the increased level of work involved as a result of the reforms in local government and that the Revenue Commissioners were not happy with increasing the level of expenses."