The main churches have turned down a request from the Government to provide a substantial amount of land or property to assist in meeting the increased demand for social and affordable housing.
The Minister for the Environment, Mr Dempsey, had asked the representative bodies of the churches to give the first option to local authorities on any land they might be disposing of.
Mr Dempsey had argued that large tracts of church land could be made available for social housing.
The 20-acre estate attached to the palace of the Archbishop of Dublin in Drumcondra is estimated to be worth more than £20 million.
Following a number of meetings with officials at the Department of the Environment, the religious bodies indicated their support for social and affordable housing projects.
However, in a reply to a parliamentary question from the Labour TD, Ms Breda Moynihan-Cronin, the Minister said "the general view of all the bodies was that there was unlikely to be a substantial amount of surplus land or property available in the near future".
Officials from the Department of the Environment met late last year with the Conference of Religious in Ireland, the Representative Body of the Church of Ireland and the Irish Episcopal Conference.
The purpose of the meetings was to make an estimate of how much surplus land or property might be available and to achieve an understanding that such land would first be offered to the relevant local authority on terms agreeable to both parties.
The Conference of Religious in Ireland has already informed the Minister that it is prepared to enter into negotiations on a "small" amount of land.
Formal replies have still to be received from the Church of Ireland and the Irish Episcopal Conference
A Department source last night said the Minister was still attempting to get "first option on any land that becomes available for sale at market value".
The Labour Party spokesman on the environment, Mr Eamon Gilmore, accused Mr Dempsey of engaging in a "public relations stunt".
He said the Minister had known there was no surplus land and that the churches could not be treated any differently to any other landowner.